Moody’s Action a “Moo Point”

Moody’s Action a “Moo Point”


I know allyuh ain’t read anything from me in a while. That’s because the only things happening these days are Covid-19, which I’m fed-up writing about, and politics, which I try my best to steer clear of, although that circus has no end of comedic material available. I mean DJs/soca artistes are in the Senate now with phones that can’t be muted. This is serious bait for a troll like me but I can’t touch it. Anyway…

On May 22, 2020, Moody’s Investor Service affirmed T&T’s credit rating at ‘Ba1’ and changed the outlook from ‘stable’ to ‘negative’. According to Moody’s, “The negative outlook reflects increased downside risks to Trinidad and Tobago’s economic and fiscal strength stemming from medium-term challenges that have now been exacerbated by the severe shock to global oil and gas demand and prices, triggered by the coronavirus pandemic”.

I saw on social media a press release touting the rating action and highlighting that the ‘Ba1’ rating is one of the highest in the Caribbean region (which isn’t entirely accurate). It also went on to minimize the rating action by saying that while a number of oil and gas exporting countries have seen their rating lowered, Moody’s “has simply changed the outlook to negative”. Simply? Woooo-saaah Tana….wooo-saaah….SERENITY NOW!!!

I was like hang on, this is misleading. T&T has been downgraded during this time by S&P and people reading this press release might get the wrong idea regarding the position taken by Moody’s. Then I clutched my chest in relief like granny grabbing her pearls, as I remembered that my readers are way smarter than that. We already discussed how credit ratings worked in a previous post (TANA-NOMICS: T&T Downgraded…go read it) so they know when someone is trying to pull a big 50c coin from back-in-the-day from behind their hairy earlobe.

Then I realized that I only briefly described the rating scale in that post, so I searched the interwebs for a pic that could help you in the future. Below are the scales used by the three major rating agencies.

Right now there are about eleven or so countries with a ‘AAA’ rating. There used to be more but the 2008 financial crisis wine down low on some of them and rupture their spleen (if you know you know). T&T is rated ‘BBB-‘ by S&P, which is right above the red line. Think of that line as the separator of the men you would take home to mammy and play house with (Investment Grade) versus the men who would lay around at home whole day watching HGTV and ask yuh for passage money to go lime by the bar every day (Junk). You can clearly see where T&T’s BBB-/Ba1 credit ratings fall. We’re almost junk and junk. We call that “split rated”.

Therefore, highlighting the fact that Moody’s confirmed our junk rating is as Joey Tribbiani would say “a moo point” (moot). If you don’t watch Friends then I’m sorry, for you, but according to Joey “it’s like a cow’s opinion, it just doesn’t matter…It’s Moo”. Yeah Moody’s didn’t make our rating “worse junk”, but is that really something to write home about?

In conclusion, my advice to you is, whenever there is a credit rating action, don’t rely on the press release from the entity that is the subject of the rating action. Always, go to the source and read the rating agency press press release or the actual report if you can get it (I can, so link me if you’re bored or need a good lullaby).

TANA

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