Research Update: Republic of Suriname Ratings Lowered To 'CCC+' On Economic And Fiscal Shock, Financing Challenges; Outlook Negative

Near-term pressures on Suriname will increase with the arrival of the COVID-19 pandemic and the fall in oil prices because the government's financing requirement remains elevated at a time when its funding options are narrowing and its institutions are weakened. Difficulties in meeting its financing requirements could constrain the country's ability to service its debt obligations, leading us to believe there is at least a one-in-three probability that Suriname could default on those obligations in the next 12 months. We are lowering our long-term sovereign credit rating as well our unsecured debt rating on the country's US$550 million bond due in 2026 to 'CCC+' from 'B'. We are also lowering our transfer and convertibility assessment on the country to 'CCC+'

...Key rating factors Score Explanation Institutional assessment 6 Weak political institutions are resulting in an uncertain policy environment in periods of stress resulting in a diminished capacity to maintain timely debt service. Economic assessment 6 Based on GDP per capita as per Selected Indicators in Table 1. Weighted average real GDP per capita trend growth over a 10-year period is below sovereigns in the same GDP category. Concentrated economy with gold mining and related manufacturing representing more than 20% of GDP. Material revisions to economic and fiscal data are common and add uncertainty. External assessment 4 Based on narrow net external debt and gross external financing needs as per Selected Indicators in Table 1. Fiscal assessment: flexibility and performance 6 Based on the change in net general government debt (% of GDP) as per Selected Indicators in Table 1. Suriname has a volatile revenue base since mining revenues represented about one-third of total revenues. Fiscal...

Research Update