Economist Ryan Straughn is warning that the recent upgrade by Standard & Poor’s (S&P) of Sagicor Finance (2015) Ltd by two notches could spell more bad news for Barbados.
Last Friday’s upgrade of Sagicor’s US$320 million seven-year senior unsecured notes to “BB-” from “B” came on the heels of a decision taken by the regional insurance and financial trading giant to move its headquarters from Barbados to Bermuda last June.
The shift came against a backdrop of Barbados suffering multiple downgrades at the hands of S&P, which Sagicor officials said had negatively affected the company’s international operations.
Straughn, who is a former president of the Barbados Economic Society, is therefore concerned that given the positive effect of Sagicor’s relocation on its international rating, other companies may opt to follow suit, in terms of packing up and leaving the island.
In any case, he said while the latest update by S&P may be a positive thing for shareholders and policyholders in the insurance company, it was certainly not a good signal Barbados.
In fact, Straughn, who is the Opposition Barbados Labour Party’s candidate for Christ Church East Central, said the unequivocal message that had been sent was that “all is not well at all” on the island.
“It [the S&P upgrade] is good for Sagicor and Sagicor policyholders, but I think that when we reflect on the impact that it has on the business environment in Barbados in particular, and as taxpayers, it is of some concern,” said Straughn, who is also a former Central Bank economist.
“If companies have to re-domicile, or relocate, in order to have good access to capital markets, then that suggests that the financial markets in Barbados may be under some strain, which only reflects the poor fiscal management that has been undertaken so far, and coupled with the very poor monetary policy implementation by the Central Bank [of Barbados],” he said.
However, Straughn does not expect any mass exodus of companies at this stage, even though he said the Sagicor news, when combined with the Guyana Central Bank’s recent decision to put a temporary freeze on its trade in Barbados currency could only spell more trouble ahead.
“From a business standpoint, if we don’t change both our monetary and fiscal policy, I think that is something that ought to be of concern because there are people, [Barbadian] business who operate in Guyana, and if that trend continues across the rest of the Caribbean, I think that could have the potential for a large impact,” he said.