The Government of Grenada has described the decision by Standard & Poor's to lower foreign currency sovereign credit ratings on Grenada to 'SD' - selective default - from 'B-/B' as premature.
"Government considers the action by Standard & Poor's as premature considering the terms of the agreement for the 2025 notes which provide a grace period of 30 days after the due date and the notice duly issued by Government to note-holders before the due date. This 30-day grace period has not yet expired," the government said in a release.
The Tillman Thomas-led administration sought to assure investors that it will continue to meet its obligations as and when they fall due on the Regional Government Securities Market (RGSM).
"The Government fully understands the importance of the RGSM for Grenada and other member governments of the Eastern Caribbean Currency Union and is deeply committed to the RGSM, said the finance ministry.
In 2005, following the devastation caused by Hurricanes Ivan and Emily, Grenada undertook debt restructuring of its long-term liabilities. However, Grenada's treasury bills on the RGSM were unaffected.
On Monday, Standard & Poor's said it was lowering the local currency sovereign credit ratings because of the severe liquidity constraints facing the country.
"The outlook on the long-term local currency rating is negative, reflecting downside risks to the ratings if liquidity pressures were to intensify," said the international rating agency.
"The downgrade to 'SD' follows the government's failure to pay the coupon due September 15, 2012 on its US$193 million bond due in 2025. In a September 12 statement to bondholders, the Grenada government stated its intention to use its best efforts to pay the coupon within a 30-day grace period," the agency noted.