Rating firm launched in Jamaica to further deepen financial system reforms
— stakeholders welcome presence of Kingston-based operationsFriday, April 30, 2021
BY KELLARAY MILES
Local stakeholders are endorsing the recent opening of an office in Jamaica by Caribbean Information and Credit Rating Services Limited (CariCRIS).
These stakeholders say that the move will help to further deepen financial system reforms as it complements ongoing processes in the country's financial sector landscape and improve investor access to information.
Speaking at the virtual launch event held earlier this week, CEO of CariCRIS Wayne Dass said that the office is being open at a time when there was an increased demand for independent credit ratings and as government modernises financial sector legislations which calls for greater levels of transparency and price discovery in the local market.
“With our business relations dating back some 15 years with clients in Jamaica and a growing clientele, it was really only a matter of time before this happened. Therefore, notwithstanding the raging coronavirus pandemic around us, we think that the time is right now and that we are indeed doing this for the right reasons,” he stated.
With approximately 25 per cent of its business accounting for local transactions, second to 42 per cent from host country Trinidad and Tobago, CariCRIS will be seeking to continue its service in providing affordable and objective ratings of entities' credit worthiness from its indigenous position of having an intimate understanding of the levels of risks unique to the Caribbean. The company, which now provides rating services to approximately 18 countries across the region, will operate locally from a small satellite office out of the Pan-Jam building in New Kingston.
Finance Minister Dr Nigel Clarke, who was the key note speaker at the launch, welcomed the firm in Jamaica as a product of government's foresight, which began in November 2018 following a set-up of the Financial Deepening Implementation Group, chaired by economics expert David Marston, with the support of key stakeholder groups. The minister said that it was this deepening of the financial market guided by proper policy frameworks which stressed the need for entities to standardise asset quality for sound investment, which has now paved the way for rating services which in turn also forms part of government's strategic plan for recovery.
“Ratings are therefore not an abstract concept for sophisticated investors, there is a public policy role and public interest that's why we want to have domestic ratings here in Jamaica,” he said, further noting that the process will aid market development and inform decision-making among investors especially at a time when government has encouraged Jamaican dollar bond issues and a need for more domestic assets to be brought to market.
Dr Clarke said that CariCRIS's decision to establish an office here reflects the entity's endorsement of local reform processes now underway as the country seeks to build back better, recover stronger and provide access to finance to support the growth of domestic businesses.
Bank of Jamaica Governor Richard Byles, commenting on the move, lauded the office's opening as another layer in protecting local investors. He said that with the introduction of recent legislations which gave rise to the use of liquidity coverage ratios (LCR), which helps financial institutions to locate assets that are high quality liquid assets (HQLA), the need for external ratings becomes paramount. The implementation of the capital adequacy framework also gives licensees the option to utilise external credit ratings as it seeks to determine the risk ratings on credit exposures. Both of these frameworks, Byles said, will auger well for the deepening of the country's capital markets, financial stability and economic growth.
Steven Gooden, president of the Jamaica Securities Dealers Association (JSDA), also endorsed the local presence of CariCRIS as a big move which supports the ongoing changes to improve market efficiency and provide wider access to financing solutions.
“Greater mobilisation of capital across the Caribbean will bring us closer to becoming a regional market. With the capital market reforms now taking place, let's take the capital markets to another level [as] Jamaica and the wider Caribbean can create a niche in the global financial marketplace to become an exporter of financial services,” he said.
CariCRIS as a regional credit rating agency has shareholdings from some 19 financial institutions inclusive of central, commercial and development banks across the Caribbean and CRISIL— an associate of globally recognised rating agency Standard & Poors. The agency, now formally approved as a recognised credit rated agency and an external credit assessment institution in the Caribbean, has to date processed over 1000 ratings for government, corporate and SME entities in the Caribbean. It has so far worked with clients in Jamaica such as JMMB, JN Group, GraceKennedy, NCB and JPS, Supreme Ventures among others.