Ratings agency assigns double credit negative to Bahamas telecoms talks

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Published on Tuesday, 07 August 2012 11:10

Written by Jeffrey Todd

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Nassau, Bahamas (Nassau Guardian): Credit ratings agency Moody's has released a damning assessment of the Bahamas government's campaign to gain majority control of the Bahamas Telecommunications Company (BTC). In a 26-page report on Moody's global credit outlook, covering nations from China to Slovakia, The Bahamas earned an entire page on the controversial issue. According to the rating agency, the move by the Bahamian government represents a double credit negative – both for the country, and the parent company of BTC, Cable and Wireless Communications (CWC).

In fact, Moody's called the government's buyout negotiations “erratic”, and from a bird's eye perspective, damaging to foreign investment. “The buyout negotiations demonstrate the government's erratic approach to its participation in the telecom sector, and is a reversal of the government's previous position on divesting and liberalizing the sector,” the report stated. “We had expected the liberalization of the telecommunications sector to occur in 2014. Such an about face is a signal of broader policy uncertainty and a deterioration of the operating climate for foreign investors.”

From a financial point of view, Moody's felt the fiscal costs of acquiring two percent equity would be “relatively modest”, should CWC be willing to sell. But analysts in New York insisted that the purchase, penalty fees and potential litigation costs place the economy in jeopardy “at a time when its finances are deteriorating”. With these factors in mind, Moody's assigned a “credit negative” to the policy.

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