Jamaica’s government is trying to save money by refinancing some of its debts.

So the Government recently received a second credit rating upgrade, this time from the international ratings agency, Moody’s. 

Moody’s upgraded Jamaica from ‘B2’ to ‘B1’ and revised the country’s economic outlook from stable to positive. 

And if you’re thinking, ‘but Kalilah, you already told us this’, that’s because I did a previous video about a ratings upgrade from S&P Global.

In September, S&P Global upgraded Jamaica’s credit rating from B+ to BB- with a stable outlook. You can watch my video on that for more info. 

Also back in March, Fitch maintained its rating for Jamaica at B+. Moody’s, S&P Global and Fitch are the three largest global credit ratings agencies. So, it’s been a good year for Jamaica’s credit ratings.

Better ratings mean the government now has more leverage to negotiate better terms and interest rates on loans and other securities. Better rates mean the country will save money on debt servicing, which they can use to invest in the country’s development.

That brings us to this latest news. The Jamaican government is reportedly looking to refinance some of its US dollar currency notes. Currency notes are like bonds for the short or medium term. 

Remember with bonds, the issuer, in this case, the government is borrowing money from the public with the agreement to pay the lender interest or dividends. Once the bond matures or reaches its end date, the lender will get back their full investment. 

So essentially, the Jamaican government has these US dollar currency notes that it has been paying out interest on. Now they want to issue new Jamaican dollar notes, then use the money from that to pay off the US dollar notes.

So it’s replacing one debt with another, but with better terms on the new debt. Which means more savings for the country.

The improved credit ratings from the three agencies also makes Jamaica more attractive to foreign investors. And of course, politically, the Government will see this as a pat on the back for their fiscal policies. 

But really, it’s a win for all of Jamaica.

And that’s the bottom line.