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S&P: Republic of Trinidad and Tobago 'A/A-1' Ratings Affirmed; Outlook Remains Stable

December 25, 2012 Standard & Poor's
NEW YORK (Standard & Poor's) Dec. 21, 2012--Standard & Poor's Ratings Services
today said it affirmed its 'A/A-1' long- and short-term sovereign credit
ratings on the Republic of Trinidad and Tobago. The outlook remains stable. In
addition, our 'AA' transfer and convertibility (T&C) assessment remains
unchanged.

"The ratings on Trinidad and Tobago are supported by the country's net
external asset position, low external vulnerability, and stable political
system," said Standard & Poor's credit analyst Joydeep Mukherji. "The
country's large energy sector sustains long-term growth prospects and provides
revenues that should allow the government to maintain moderate levels of
debt." The government's Heritage and Stabilization Fund, which holds fiscal
assets of about 19% of GDP, and its investor-friendly policy in the energy
sector augur well for long-term fiscal flexibility.

"Trinidad and Tobago's high dependence on the energy sector, which accounted
for 45% of GDP and 82% of merchandise exports in 2011, constrains the
ratings," said Mr. Mukherji. In addition, other sectors of the economy--whose
expansion could gradually diversify its profile and reduce its vulnerability
to a sharp drop in the price of oil and natural gas--are developing slowly.

The stable outlook reflects our expectation that the economy will resume
growing in 2013. The country's growth prospects, as well as the trajectory of
the government's debt burden, depend on the long-term development of the
energy sector. Success in boosting exploration and production levels, as well
as in enlarging downstream activities, could bolster GDP growth, gradually
improve government finances, and reduce the sovereign's debt burden. That,
along with steps to strengthen financial laws and supervision to avoid
episodes like the 2009 collapse of CLF Financial, could, over time, lead to an
upgrade.

Conversely, a protracted slowdown in the energy sector, along with poor
implementation of the government's own investment plans, could result in
prolonged low economic growth and persistent fiscal deficits, weakening the
country's fiscal and external profiles. Under such a scenario, we could lower
our ratings on Trinidad and Tobago.
  • Full name
    Republic of Trinidad and Tobago
  • Registration country
    Trinidad and Tobago