Puerto Rico defaulted on its $58 million debt repayment this week for the first time in its history. With its failure to repay creditors, the commonwealth joins the ranks of countries and governments burdened by crippling debt levels and extremely low credit ratings.
Moody’s Investors’ Service rates seven countries Caa1 or worse, several tiers lower than Ba1, which still carries a significant credit risk. These countries are approaching or have narrowly escaped bankruptcy. Ukraine is rated Ca, which is currently the lowest credit rating of any country reviewed by Moody’s.
All seven national economies instill relatively little confidence among investors. However, Jamaica’s credit rating was upgraded by Moody’s this year, and Argentina’s and Belize’s credit ratings remained stable. The remaining four countries, on the other hand, were downgraded.
A country’s history of fiscal responsibility, including past defaults, and current compliance with IMF debt repayment plans, are major contributors to Moody’s evaluations.
Extremely high debt levels, which while not always a feature of unhealthy economies, can also contribute to a country’s poor credit rating. The debt of four of the seven countries was equal to more than 75% of GDP. In Jamaica and Greece, debt was well over 100% of GDP.
Political conflicts have also weakened some of these economies, which in turn has introduced more uncertainty and increased risk. Ukraine’s conflict with Russia over its annexation of Crimea, for example, and the resulting U.S. and European sanctions, have contributed to the country’s downgrade in March.
Borrowing funds in the international bond market is often far more costly for countries with poor credit ratings. Investors require greater returns on what they perceive to be riskier investments and charge higher interest rates as a result. For example, a 10-year U.S. Treasury Note has an annual yield of just 2.16%. By contrast, a comparable bond recently issued by Jamaica pays out 6.44% a year. Yields on 10-year Greek government bonds reached 29% in early 2012, just before the country defaulted.
Foreign investment is vital for most countries, particularly developing nations. To promote interest among investors, countries use a range of strategies. Often, these countries issue bonds in other, safer currencies in order to be more competitive in the international bond markets. Nations such as Argentina, Jamaica, Belize, and Ukraine have all issued bonds in other nations’ currencies. Inflation rates for common currencies such as the dollar, yen, and euro are typically far lower and more stable than the currencies of the issuing countries. This means that investors do not need to worry as much about their investment losing value.
Based on credit ratings provided by Moody’s Investors Service, 24/7 Wall St. reviewed the seven countries with credit ratings of Caa1 or worse. A rating of this level indicates considerable credit risk. Because many of these nations have significant debt in other currencies or have otherwise weak currencies, we used foreign currency ratings and outlooks for these nations. Figures on GDP growth, inflation, unemployment, population and debt levels are estimates for 2014 from the IMF’s World Economic Outlook.
These are the 7 countries at risk of default.
7. Belarus
> Moody’s credit rating: Caa1
> Moody’s outlook: Negative
> 2015 Gov’t debt (pct. of GDP): 39.6%
> 2015 GDP per capita (PPP): $17,836
Considered by many to be the last dictator in Europe, President Alexander Lukashenkohas ruled Belarus since 1994. Part of Lukashenko’s reputation likely stems from his refusal to privatise state enterprises, which has discouraged foreign investment, according to the BBC.
Like several other Commonwealth of Independent States (CIS), Belarus’s economy — and its credit rating — is largely dependent on the Russian economy. U.S. and European-imposed sanctions on Russia following the crisis in Ukraine, as well as falling oil prices in recent years, are among the major contributors to the weakening confidence in Belarus’s economy. In an attempt to counteract rampant inflation, Belarus tied its ruble to three foreign currencies in January: 40% Russian ruble, 30% U.S. dollars, and 30% euros.
Moody’s in April downgraded Belarus’s sovereign debt rating to Caa1 from B3 — Belarus is one of only seven countries with a credit rating worse than B. Ratings C and worse are associated with relatively high levels of uncertainty, and creditors can expect a 90% to 95% recovery rate — the expected percentage of principal and interest returned to lenders — in countries with Caa1 ratings.
MORE: The happiest countries in the world
Jamaica went to shit. How they gonna get rid of the airline, strip the soul of its minerals and send it to china, run weh all the vendors, sellout all the scholars, make a treaty with the US to sell out the moneymakers and expect to be productive? AmeriKKKa still has its eyes on the sunken gold and Jamaica should remember when AmeriKKKa fooled them into accepting all those Haitians in exchange for new Toyota police cars. Also, during that time Bill Clinton wanted to retrieve the gold and the Queen had to block it. The politicians in office are solely driven by greed and Jamaica will soon become worst than Haiti.
Yes and because the generation of Jamaicans now know nothing about working hard..They are worthless and prideless
You cant build a nation without producing and instead of them finding ways to make a living who nah sell dem body a walk and teef…Jamaica in a very very dark place
DENNIS BROWN – REVOLUTION
Sad thing is those who have the money, skills and knowledge who could move back and help in the rebuilding process are afraid to because of the crime situation. Imagine Jamaicans are now retiring in other tropical countries and using their money, skills and knowledge to build up those nations. If anybody did tell mi seh in 30yrs dis is what JA would come to I would have called them a liar. So many bloody years and wasted opportunities, all everybody go in and do is teef and scrape for them and their own. Now you trying to pull up in one of the most devastating economic times ever. JA is a day late and a dollar short.
Yes so we have to attact the government first so they can move forward on crime. It serious bad out there
Watching the fall of my nation really is heartbreaking!
When they robbed my 105 year old grandfather I knew Jamaica had become garbage. We own the highest mountain in ST James (mount arawak), we also have over a hundred plus acres of land on my maternal side and another 75+ on my paternal side. With all my knowledge and ideas I’m confident in creating new jobs and generating revenue for the country using the land. 10 years ago I presented my proposal to some officials only to have them dump 2000 free coconut trees on the property and left me high and dry. In exchange for planting the trees, a group of people in the community are now able to collect all revenues from the plantation so I guess some good came out of it
Manushka mi doe mean fi laugh :ngakak
2000 coconut??????????? a farrin coconut eno dem was giving dem out all over jamaica to farmers………that 2000 coconut could not keep no work going at the time it would take years…now a ten years what kind of revenue it bringing to the community ? dem a use up all of the coconuts?
This is a crying shame…..
Fi know seh Jamaica is the leading exporter of largest alumina products, sugar/rum, coffee, jerk spices (amongst many other things) & with tourism bringing in so much money yearly, Jamaica shoulda be one of the richest islands…
The whole gov’t need fi pop down & rebuild again. Dem ah run di country into di ground.
The government and the people..Lazy dont want to work not even cook dem want to cook
America do not want Jamaica. If they did PJ would have given it away since then. America need big fishes inna dem sea. India (nuclear powerhouse). The middle East(oil and gold powerhouse) Thats y dem kill Ghadhafi. Foreign policy aint no joke. What many don’t know too is that the Queen is still standing tall behind Jamaica with many foreign policy issues. America jus a spite d little island. She Putin decided to invest some money inna Ja deh. Foreign policy.
The sell the coconut, some they use to make oil and milk. One of the guys was able to accumulate 5 cows, 15 goats, some pigs and send his daughter to school. They’ve planted cinnamon, mahogany and coco trees, and a bunch of other things. Its working for them. I don’t know if they’ll make money off the mahogany since everyone is into plastic. Most of the coconut trees are sandglass trees and they don’t have those in AmeriKKKa. The only overnight money I know how to make is daytrade, steal, scam and sell drugs
Mi cyah badda wid u eno :ngakak Wood is always in …it depends on what they make with the wood..mahogany caskets are expensive so dem can all try that..coconut can be used to make so many things yah now u can open factory oh wid di byproduct
On a serious note as mentioned above… Most Jamaiacans a jump up and dance seh jamaica is independent… That is all a sham, any major decision have to be made by the Governor General, AND GUESS WHO THE GG REPORTS TO DIRECTLY? The Queen of England… Yes the queen of England still running this shit and can overide any decision the government make… That is how they want too see Jamaica Suffer slowly but surely, it is all planned to depress many nations so they can have total power of the world… BUT THE DAY IS HERE AROUND THE CORNER WHERE ALL WILL BE JUDGED…
Who in their right mind would think America wants Jamaica? Jamaica sold out and America capitalized. Everyone knows that you can’t sign a treaty with them and that Jamaica did. The little gold that they were after is probably gone by now since they have FULL access to the island. Once upon a time people could take their money from America and hide it in a bank in Jamaica, but now that can’t gwaan. Wait until Cuba can import/export to America.
That is what I heard this senior was saying in the JA paper the other day how the young people nowadays do not want to work. Dem lazy and wutless. Not to mention TIEF. Dem tief fe dress up and bleach fe go dance. Like that is life and living. They are worse than dogs the way how they behave towards one another. Everybody cute and rich. Stupid eediot dem. That is exactly why dem a dead fe hungry out there. My mother and her siblings said growing up in the country with their parents they dont remember EVER being hungry. If anything, they had too much food. Shame on this generation 🙁
You know is almost 8 yrs mi nuh see yawd and all di time mi parents begging mi to visit and everytime mi tink bout visiting mi just feel pon pile a stress pon mi. Mi honestly nuh want to be one a dem ppl weh ongle show up when is funeral time. I do want to visit, but I also do not.
Some nuh waan work and some a working for nothing(bus fare and half a lunch money ).The employers JA tek advantage a di minimum wage.
Met dem down deh a wait fi barrell twice if not thrice a year…jamaica pple get too lazy dem ll start sell dem batty nat even pum pum a sell like dat again…di young gyal dem go afta di rich man dem like bolt weir chromatic etc.. N mek friends inna di rich circle so dem can live di lifestyle if theyre not wifed up by the peeps mentioned earlier
While I agree with Met and Anon (6:20) abt the youths having no desire to work etc., whenever I hear about youths failing I often find myself asking why and how come. Question then; If the prior generation is responsible for teaching and passing on proper morals and values to the next (and given we admit that the youths have failed), then doesn’t that also make us collective failures?
Its not a question meant to divert or cast blame per se, just my humble belief that we ALL (myself included) share the blame.
True……………….to an extent because the generation before was di matey era and those women spent more time on the men than the children…imo
The people in the position to give back are very selfish and that is what created the divide between generations in Jamaica.They treat the poor like shit.
The govt is d biggest criminal an we want dem fi stop crime. Who in parliament is credible? Name one person that is for d people.
come on people stop putting down the people of Jamaica. Whats an average poor person to do with ZERO opportunity. The Government tax even patty for god sakes. There is noooo JOBS none. Even the mexicans bring their own workers to work in the hotel. Prime example Moon Palace in Ocho Rios . Almost every worker in the 600 million dollar project is MEXICAN. The government get kickbacks and issue work poermits and turn blind eye. Its easy to sit a farrin and criticize but nuff a unnu would turn tief or worse if unnu never get visa, Selling pussy and batty is now a repected profession in Jamaica cause nuttin else nuh de deh fi dem. All who complaining should try help IT NUH EASY A YAAD fi the yute dem. All when them dun university what left?? Banking industry soon collapse with the US now controlling it. I hate to hear people a cuss the people dem yuh see and dont try help or pressure the tiefin Government.
U a talk like a stranger a cuss dem…is we jamaicans who know those jamaicans that are talking…dem dont want to work
All I knw is that no one wants to get their hands dirty and work hard, my cousin have goats the expensive ones, he started from two goats until he reach twenty. One goat value at least 20,000 and they stole 13 one night and come back for the other 7 two nights later. Futhermore after we do all the work planting the crops they reap everything, no one wants to work but everyone wants to eat.