CHICAGO--()--Fitch Ratings has downgraded Clarendon Alumina Production Limited's (CAP) ratings as follows:
--Long-term foreign currency (FC) Issuer Default Rating (IDR) to 'CCC' from 'B-';
--Local currency (LC) long-term IDR to 'CCC' from 'B-';
--USD200 million 8.5% unsecured notes due November 2021 to 'CCC/RR4' from 'B-/RR4'.
The Negative Outlook has been removed.
KEY RATING DRIVERS
CAP's ratings are directly linked to those of Jamaica. The unsecured notes are supported by an explicit unconditional and irrevocable guarantee by the Government of Jamaica (GoJ) for the timely payment of interest and principal.
The downgrade of CAP's ratings to 'CCC' follow the downgrade of Jamaica's international senior unsecured debt instruments to 'CCC' from 'B-'and long-term FC and LC IDR's to 'C' from 'B-' on Feb. 12, 2013.
CAP's ratings mirror the ratings for Jamaica's international bonds, as an unsuccessful debt exchange could result in increased financing pressures for the sovereign.
Jamaica's ratings were downgraded after the proposed debt exchange announced by the government involving approximately J$860 billion in both FC and LC domestic debt. Fitch considers that Jamaica's proposed domestic debt exchange will, if completed, constitute a default. Hence, the sovereign's FC and LC IDRs will be lowered to 'Restricted Default' (RD) upon completion of the exchange. The government plans to close the exchange on Feb. 21, 2013.
Jamaica's ratings will be raised out of default shortly after Fitch determines that the exchange has been successful, which is typically measured by a minimum participation rate of 90%. The new rating will be consistent with Jamaica's prospective credit profile and debt structure. CAP's ratings will mirror the action taken in accordance with its 100% government ownership.
CAP is the holding company for the government of Jamaica's 45% ownership in a joint venture with a subsidiary of Alcoa called Jamalco, which is a bauxite mining and alumina refining operation in Jamaica. Jamalco is an unincorporated joint venture association that involves the proportionate sharing of production costs and the alumina output of the Clarendon Alumina Refinery (CAR). CAR's production rate during fiscal 2012 was 1.27 million tons, down on normal average production of 1.36 million tons due to power issues during the fiscal year.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria & Related Research:
--'Corporate Rating Methodology' (Aug. 8, 2012);
--'Country-Specific Treatment of Recovery Ratings' (June 15, 2012).
Applicable Criteria and Related Research:
Corporate Rating Methodology
Country-Specific Treatment of Recovery Ratings