February 23, 2011

Military Regime Hypes Up Revised Fiji Credit Rating

Bainimarama leads the charge in trumping up and "massaging" S&P's revised credit rating of Fiji.

The illegal and treasonous  pretend PM and Finance Minister states that the revised rating "reflects well on government’s policy objectives which include prudent management of Government finances and a transparent and accurate recording system."

He is quickly echoed by academic, Dr Tiru Jayaraman, at the University of the South Pacific lauding that the revised rating "raised the credibility of the country, inspired confidence in the currency, as a safe destination for investment which would eventually lead to greater foreign direct investment inflows."   

Reproduced below in totality is what S&P really said. The only revision to the rating is the outlook on our long-term foreign currency rating.

Much of this also depends on whether we can service our US$150 million bond that is due on 13 September 2011 and as we all know, it will be almost impossible for Bainimarama to make good on that front.

The ratings and what they mean were well demystified by Moody's in 2009.

Other ratings by Moody's and Fitch have not changed either.
Foreign Currency Ratings On Fiji Islands Affirmed At 'B-/C'; Outlook Revised To Positive On Improving External Position
Publication date: 18-Feb-2011 01:19:16 EST

MELBOURNE (Standard & Poor's) Feb. 18, 2011--Standard & Poor's Ratings
Services said today that it has affirmed its 'B-/C' foreign currency and 'B/C'local currency issuer credit ratings on the Republic of Fiji Islands. The outlook on the long-term foreign currency rating is revised to positive from stable. The outlook on the long-term local currency rating remains stable.

At the same time, Standard & Poor's maintained its 'B-' T&C Assessment and assigned a '4' recovery rating to the government's foreign currency debt instruments

The ratings on Fiji reflect the country's persistent fiscal and current
account deficits, as well as deficiencies in available data–a factor that complicates our analysis
. These factors are offset, in part, by Fiji's improved external indicators. 

We estimate Fiji's gross external financing needs (current account outflows plus short-term external debt by remaining maturity) as having fallen to 100% of current account receipts plus usable international reserves in 2010, and we forecast the ratio will remain at this level this year from 108% in 2009. A recovery in tourism, merchandise exports (fuelled by mining and mineral water), and foreign direct investments (FDI), along with a US$93 million Special Drawing Rights allocation from the IMF, helped boost reported official reserves to around US$715 million in February 2011 from a low of US$240 million in March 2009, and in turn improve the external indicators. Fiji's improved external position also reflects a 20% devaluation of the Fiji dollar against a currency basket in April 2009 and the use of some capital controls.
Our forecast of US$263 million for Fiji's 2011 external borrowing needs
includes the government's US$150 million bond due Sept. 13, 2011. We expect the government to refinance this debt in the first half of this year

"The positive outlook on Fiji's foreign currency rating reflects the
improvement in Fiji's external position, including in the level of foreign exchange reserves," said credit analyst Kyran Curry, of the Sovereign Ratings group. "It assumes that the government will successfully refinance its 2011 external bond.

"An upgrade of the foreign currency rating could follow improvements in one of several areas, including strengthening the islands' political institutions, improving donor relations, enhancing growth prospects through labor or market reforms, bettering the external indicators, or placing the government's debt trajectory on a steady downward slope. On the other hand, Fiji's ratings could stabilize at current levels if none of these developments materializes or if external or domestic shocks sharply reduce Fiji's international reserves from current reported levels."

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.

Standard & Poor's (Australia) Pty. Ltd. holds Australian financial services licence number 337565 under the Corporations Act 2001. Standard & Poor's credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).

Primary Credit Analyst: Kyran Curry, Melbourne (61) 3-9631-2082;
Secondary Contact:  Claire Curtin, Sydney 612-9255-9882;

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