Caribbean Market Overview - Q1 2020 - CIBC FCIB
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Caribbean Market Overview
Q1 2020
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Caribbean Market Overview – Q1 2020 Table of Contents Caribbean Market Review ......................................................................................................... 2 Caribbean Economic Review .................................................................................................. 11 Anguilla .................................................................................................................................... 13 Antigua and Barbuda ............................................................................................................... 15 Aruba ....................................................................................................................................... 17 The Bahamas .......................................................................................................................... 19 Barbados ................................................................................................................................. 21 Belize ....................................................................................................................................... 23 Bermuda .................................................................................................................................. 25 Cayman Islands ....................................................................................................................... 27 Costa Rica ............................................................................................................................... 30 Curaçao ................................................................................................................................... 32 Dominica ................................................................................................................................. 34 Dominican Republic ................................................................................................................ 36 El Salvador .............................................................................................................................. 38 Grenada .................................................................................................................................. 40 Guyana .................................................................................................................................... 42 Jamaica ................................................................................................................................... 44 Panama ................................................................................................................................... 47 St. Kitts and Nevis ................................................................................................................... 49 St. Lucia .................................................................................................................................. 51 Sint Maarten ............................................................................................................................ 53 St. Vincent and the Grenadines .............................................................................................. 55 Suriname ................................................................................................................................. 57 Trinidad and Tobago ............................................................................................................... 59 Turks and Caicos .................................................................................................................... 62 About CIBC ............................................................................................................................. 64 About CIBC FirstCaribbean ..................................................................................................... 66 Notes ....................................................................................................................................... 67 CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 1 Caribbean Market Review CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 2
Caribbean Market Review Luis Hurtado
CIBC Capital Markets
Summary
Emerging market credits have enjoyed an impressive rally since our last publication. The resolution of the US-China
phase-one negotiation, and the USMCA ratification contributed the most to this stance in late 2019 and in early January.
Moreover, despite a pause in the easing cycle, the accommodative monetary policy in advanced economies is expected
to provide some support for emerging market assets early this year. Nevertheless, a new downside risk for emerging
markets credits appeared during the second half of January as the COVID-19 outbreak in China crowded headlines.
Global growth concerns have increased since then, with commodity producers taking the largest hit as prices declined.
The proactive liquidity injection in the Chinese markets have provided some relief; however, we expect global growth and
trade disruption headlines to provide some volatility in the short term with commodity export countries at the largest risk.
In line with the optimism driven by trade deals, and accommodative monetary policy around the world, Central American
and Caribbean bonds maintained a solid performance in Q4 2019 and early 2020, providing an ideal environment for a
large round of debt issuance in the region. Hence, we saw COSTAR finally issuing US$1.2bln in new COSTAR ‘31s and
tapping COSTAR ‘45s for another US$300mln. PANAMA re-opened two bond issues, PANAMA ‘53s (US$1bln) and
PANAMA ‘30s (US$300mln) for a total US$1.3bln issuance, while DOMREP covered almost entirely its external financial
need for 2020 with US$1bln 20Y and US$1.5bln 40Y bonds. Looking at the intrinsic developments favouring credits in the
region, ELSALV was once again the outperformer as the government passed the 2020 Budget after a tax amnesty was
negotiated with ARENA amid President Bukele’s 90% approval rating, and improvements on security. Nevertheless, a
recent clash with congress reversed this trend. COSTAR also saw some improvement during Q4 2019; however, this
optimism has subsided in recent weeks as the government missed its 2019 fiscal targets by 0.6%-0.7% of GDP.
PANAMA’s lagged behind other credits in the region, as the credit remained expensive, while the long part of the curve
absorbed further debt issuance. DOMREP was once more an underperformer as fiscal slippage continued, in line with the
start of the 2020 presidential election cycle.
In COSTAR, 2019 Nominal deficit landed at 7.0% of GDP, well above the 6.2%-6.4% expected by the government and
our forecast. The improvement in the revenues arising from the implementation of tax measures following the 2018 fiscal
reform have yet to translate into lower fiscal deficits as Costa Rica battles a high interest expense burden (up 23.5%) and
increasing capital expenditures (up 50% y/y) in line with the government’s efforts to boost sluggish growth and reduce the
high unemployment rate. Moreover, despite the implementation of the fiscal rule, we have also seen an acceleration of
current expenditures to 9.4% in 2019, 2.9 p.p. higher than the increase in 2018. The consolidation efforts under the fiscal
reform depend on fiscal rule compliance, with the government estimating savings of 2% of GDP. We maintain our
cautious bias on COSTAR and expect fiscal concerns to remain in place throughout 2020 and accentuate in 2021 as
stricter expenditure rules kick in with central government debt jumping above 60% of GDP.
In Panama, the current administration’s goal to implement a considerable fiscal adjustment process remains a difficult
task for the years to come as growth prospects remain below potential output. Only in 2019, forecasts were revised
steeply downward from 4%-4.5% at the start of the year to end in the 3.1%-3.3% range despite the start of Minera
Panama’s operations in H2 2019. Moreover, the 2020 Budget points to further restrictions on expenditures, with capital
expenses dropping another 6.7%. 2020 growth forecasts by private and public entities range from 3.0%-5.5%, with the
government’s estimates at the high end of the range at 5.2%. The market has remained optimistic on PANAMA with
substantial demand on debt issuance despite fiscal concerns; however, we expect the curve to lose steam as growth fails
to substantially pick up.
The DOMREP curve has already lagged the impressive performance of similar credits in the region, reflecting fiscal
concerns amid the election cycle and the poor performance of the tourism sector. Recent polls point to PRM’s Luis
Abidaner (42%-43%) leading the presidential race with a significant 11 to 15 point advantage over PLD and President
Danilo Medina’s candidate, Gonzalo Castillo (28%-31%), while former president Leonel Fernandez (16%-19%) obtained
a distant third place. As of now, all seems to indicate that the country will head for a runoff election between Abidaner and
Castillo in June 2020, adding to concerns of further fiscal slippage and the underperformance of the DOMREP curve.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 3
Bahamas: Real GDP likely continued to advance during the first nine months of 2019. However, following a
strong performance during the first eight months of 2019, the tourism sector has begun to experience Hurricane
Dorian’s catastrophic impact. Total visitor arrivals to The Bahamas advanced 13.1% y/y during January to August
2019, reflecting expansions in both air (up 13.1% y/y) and sea (up 12.3% y/y) arrivals. Increased air arrivals to
New Providence and Family Islands of 17.0% y/y and 4.7% y/y, respectively, eclipsed an 11.3% y/y decline to
Grand Bahama. Similarly, sea arrivals to New Providence and Family Islands grew 20.2% and 11.4%,
respectively, but arrivals to Grand Bahama fell 13.0% y/y. In the aftermath of Hurricane Dorian, total visitor
arrivals slumped 12.8% y/y in September, reflecting declines of 14.7% y/y and 12.4% y/y in air and sea arrivals
respectively. During FY2018/19 ended June 2019 the fiscal deficit narrowed 46.4% y/y to US$222.4mln, in line
with the government’s target under its Fiscal Responsibility Law (FRL). National debt rose 2.8% y/y to US$8.26bln
(66.9% of 2018 GDP) at September 2019. Central government’s external debt and contingent liabilities fell 1.5%
y/y and 5.3% y/y, respectively, but central government’s domestic debt rose 5.2% y/y.
Barbados: The Central Bank of Barbados (CBB) reports that real GDP fell 0.1% y/y during 2019 as the
improvement in tourism output remained insufficient to compensate for the weak outturn of most other economic
sectors. Tourism GDP expanded 2.9% y/y. Total long-stay arrivals advanced 3.5% y/y, reflecting a greater
number of tourists from Barbados’ two largest source markets, the UK and the US, but arrivals from Canada and
the CARICOM dipped. Despite a 77.8% y/y increase in government capital spending to US$104.9mln,
construction output is estimated to have declined 4.7% y/y, in line with a fall-off in employment in that sector. The
government’s fiscal surplus improved US$120.0mln to US$157.1mln during the first nine months of FY2019/20
ended December 2019. Further, the primary surplus increased US$56.9mln to 4.8% of GDP, with progress
toward the 6% of GDP target for the full fiscal year. The improved fiscal surplus allowed for a reduction in
government debt levels. Total gross public sector debt fell from US$6.43bln (126.3% of GDP) at December 2018
to US$6.22bln (119.5% of GDP) at December 2019, supported by the conclusion of the foreign currency debt
exchange.
Bermuda: The Government of Bermuda reports real GDP expansions of 3.7% y/y and 3.3% y/y in Q1 and Q2
2019, respectively, led by increased gross capital formation. Since then, preliminary indicators suggest a likely
continuation of these trends. Air arrivals from all major markets fell, with the number of tourists from the US, the
UK, Canada, Europe, the Caribbean, Asia and all other markets declining 5.9% y/y, 3.2% y/y, 3.1% y/y, 5.4% y/y,
5.6% y/y, 17.9% y/y and 36.1% y/y, respectively. The government of Bermuda reports that the fiscal deficit
narrowed US$39.2mln to US$7.6mln during the first six months of FY2019/20 ended September 2019. Gross
debt at the end of September 2019 was recorded at US$2.7bln (US$2.56bln net of the sinking fund) and 42.3% of
2018 GDP.
Costa Rica: Q3 2019 GDP growth came in at 2.3% y/y, bouncing back from the 0.6% posted in Q2 but still below
the 2.6% y/y posted in Q2 2018. The latest numbers suggest 2019 GDP will come in at 2.1%, slightly below the
2.2% expected by the Central Bank of Costa Rica. The 2019 nominal deficit came in at 7% of GDP, deteriorating
from the 6.3% of GDP posted in November and the 5.8% deficit posted at the end of 2018. The 12-month primary
deficit also deteriorated to 2.7% of GDP from the 2.2% posted in November and the 2.3% in 2018. We maintain
our 2.0% growth forecast for 2019 and slight rebound to 2.5% in 2020, consistent with the latest economic data
releases and our previous downward bias comments. With regards to the fiscal deficit and financial needs for this
year, with different sectors’ reluctance to fully adhere to the fiscal rule, we see the return of fiscal compliance
concerns into 2020 and above target nominal fiscal deficits.
Dominican Republic: Q3 2019 GDP growth landed at 4.8% y/y, accelerating from the 3.7% y/y posted in Q2
2019 but still below the 5.7% reached in Q1 2019. With this number, Q1-Q3 2019 GDP increased 4.7% y/y, while
preliminary Q4 2019 numbers from Banco Central de la Republica Dominica (BCRD) estimate that 2019 growth
reached 5.1%, the highest in Latin America. January-November 2019 Central Government revenues reached
DOP599bln, increasing 9.1% y/y and well below the 13.1% y/y gain posted during the same period a year earlier.
On the other hand, January-November 2019 total expenses came in at DOP675.9bln or up 12.2% y/y, up from
5.1% y/y posted in the same period a year earlier. With these numbers, the 12-month central government nominal
deficit reached DOP102.5bln or 2.3% of GDP while the primary surplus came in at DOP18.4bln or 0.4% of GDP.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 4
These numbers confirmed our earlier expectations of a nominal fiscal deficit of approximately 2.4% of GDP, well
above the 1.7% budgeted by the government at the start of 2019. On this, we would highlight that in November
the government recognized a fiscal gap of DOP25bln (or 0.6% of GDP), coming from a DOP15bln drop in
revenues and expenditures, amounting to DOP10bln higher than estimated in the approved 2019 budget.
El Salvador: Q3 2019 GDP growth came in at 2.7% y/y, accelerating from the 1.9% y/y posted a quarter earlier
and the 2.3% y/y in Q1 2019. With these numbers 12-month GDP growth came in at 2.3%, right at the Banco
Central of El Salvador’s forecast for 2019. Moreover, economic activity data in H2 2019 shows that this
improvement was led by the construction, electricity, financial, and real estate sectors. More recent data show
that the rebound in growth continued in Q4, with economic activity increasing 2.6% y/y in both October and
November. On the fiscal front, the 12-month NFPS nominal deficit (including donations and pensions) came in at
US$825mln (-3.1% of GDP vs. 2.7% in 2018), while the 12-month primary surplus came in at US$165.8mln (0.6%
of GDP vs 0.9% in 2018). Public sector debt increased 4.4% in 2019 to US$19.8bln. As a percentage of GDP,
public sector debt reached 50.4%, 0.1 percentage points higher than a year earlier.
Jamaica: Greater tourism, mining and construction activity sustained real economic growth in Jamaica at 1.5%
y/y during H1 2019. The government’s fiscal surplus improved US$77.5mln to US$85.6mln over the first eight
months of FY2019/20 ended November 2019 as greater revenue collections outpaced increased spending. Public
sector debt fell 3.8% y/y to US$14.54bln at October 2019. On September 27, 2019, Standard and Poor’s
upgraded Jamaica’s long-term foreign and local currency rating from ‘B’ to ‘B+’, citing the sustained progress in
attaining macroeconomic stability. Additionally, on December 11, 2019, Moody’s upgraded Jamaica’s long-term
issuer and senior unsecured rating from B3 to B2, alluding to the strong commitment to fiscal consolidation and
structural reform.
Panama: Q3 2019 GDP came in at 2.7% y/y, decelerating from the 2.9% y/y and 3.1% y/y increases posted in Q2
and Q1 2019, respectively. With these numbers, the Panamanian economy grew 3.2% over the 12-month period
ending September. We do not expect to see much improvement from this level, despite Minera Panama ramping
up production, as the government implements fiscal measures to control spending and reduce the larger fiscal
deficit. Non-Financial Public Sector (NFPS) revenues in 2019 landed at US$12.3bln, down 3.7%. Total expenses
dropped 1.6% y/y to US$14.4bln. Hence, the NFPS nominal deficit in 2019 came in at 3.1% of GDP, up from
2.9% during the same period in 2018, while the primary deficit reached US$1.4bln or 2.0% of GDP. The new
Fiscal Responsibility Law stipulates a 3.5% nominal deficit for 2019. Nevertheless, despite the deficit beating the
revised 2019 deficit target, Fitch changed Panama’s BBB credit outlook to negative from stable as it reflects a
marked deterioration in fiscal deficits and a significant increase of the government debt burden. This follows the
upward revision to deficit targets by the new administration and growth deceleration.
Suriname: Preliminary data from the Centrale Bank van Suriname suggest investment activity likely improved
during the first nine months of 2019, but led to a deterioration of the external current account balance. The
government’s deficit widened US$46.8mln to US$$223.7mln over H1 2019 as an expansion in revenue receipts
could not keep pace with the surge in government spending. Specifically, government expenditure rose 26.4%
y/y, despite the slashing of arrears payments for previous years to less than one-fifth of that in H1 2018. The
government’s total debt stock rose 14.5% y/y to US$2.77bln. External debt increased 6.8% y/y to US$1.80bln
while domestic debt rose 27.9% y/y to US$969.2mln, respectively, at the end of November 2019.
Trinidad and Tobago: The Central Bank of Trinidad and Tobago (CBTT) estimates that slippage in both energy
and non-energy output likely reduced economic activity during the first two quarters of 2019, while preliminary
indicators suggest a mixed performance over the remainder of the year. The CBTT reports that preliminary
estimates indicate a US$258.4mln improvement in the fiscal deficit to US$581.7mln or 2.4% of GDP for the full
fiscal year ended September 2019, compared to 3.6% of GDP in FY2017/18. Gross public sector debt fell 1.7
percentage points y/y to 74.4% of GDP at September 2019, as central government debt declined 2.0 percentage
points y/y to 55.9% of GDP, but contingent liabilities rose 0.2 percentage points y/y to 18.4% of GDP. Central
government domestic debt fell from 42.1% to 39.8% of GDP, but central government external debt rose from
15.8% to 16.1% of GDP.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 5
Chart 1 Chart 2
High Yield - 10Y Against Benchmark Investment Grade - 10Y Against Benchmark
bps 450 bps
570 DOMREP COSTAR JAMAN ELSALV PANAMA BAHAMA BERMUD TRITOB
400
520 350
470 300
420 250
370 200
320 150
270 100
220 50
170 0
Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20 Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20
Source: Bloomberg and CIBC Capital Markets
10Y bonds are: COSTAR 6 1/8 02/19/31 DOMREP 6 07/19/28 JAMAN 6 3/4 04/28/28 BAHAMA 6.95 11/20/29 BERMUD 4 3/4 02/15/29
TRITOB 4 1/2 08/04/26 PANAMA 3.16 01/23/30 SURINM 9 ¼ 10/26/26 ELSALV 8 5/8 02/28/29
Chart 3
Caribbean Bonds Change in Yields Since Last Publication (Sep 3, 2019)
ELSALV 5 7/8 01/30/25
ELSALV 6 3/8 01/18/27
ELSALV 8 5/8 02/28/29
TRITOB 4 1/2 08/04/26
ELSALV 7.65 06/15/35
ELSALV 7 3/4 01/24/23
TRITOB 4 3/8 01/16/24
ELSALV 7 5/8 02/01/41
ELSALV 7 5/8 09/21/34
JAMAN 8 03/15/39
COSTAR 4 3/8 04/30/25
COSTAR 4 1/4 01/26/23
ELSALV 7.1246 01/20/50
BAHAMA 5 3/4 01/16/24
JAMAN 8 1/2 02/28/36
JAMAN 7 7/8 07/28/45
JAMAN 7 5/8 07/09/25
BAHAMA 6 5/8 05/15/33
DOMREP 6.6 01/28/24
JAMAN 6 3/4 04/28/28
COSTAR 7.158 03/12/45
BAHAMA 6.95 11/20/29
DOMREP 8 5/8 04/20/27
DOMREP 5 1/2 01/27/25
COSTAR 7 04/04/44
COSTAR 5 5/8 04/30/43
DOMREP 5 7/8 04/18/24
JAMAN 9 1/4 10/17/25
ARUBA 4 5/8 09/14/23
DOMREP 6 7/8 01/29/26
PANAMA 7 1/8 01/29/26
PANAMA 8 7/8 09/30/27
BAHAMA 7 1/8 04/02/38
BERMUD 4.854 02/06/24
PANAMA 4 09/22/24
PANAMA 3 3/4 03/16/25
PANAMA 9 3/8 04/01/29
PANAMA 4 1/2 05/15/47
PANAMA 3 7/8 03/17/28
PANAMA 4.3 04/29/53
PANAMA 3.87 07/23/60
PANAMA 3.16 01/23/30
DOMREP 7.45 04/30/44
DOMREP 6.85 01/27/45
TRITOB 9 3/4 07/01/20
DOMREP 6.4 06/05/49
DOMREP 7 1/2 05/06/21
SURINM 9 1/4 10/26/26
-150 -100 -50 0 50 100
Source: Bloomberg and CIBC Capital Markets – FICC Strategy.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 6
Chart 4 Chart 5
Caribbean – Investment Grade Caribbean – High Yield
YTM 14 YTM
6
12 SURINM '26
BAHAMA '38
5 BAHAMA' 33
10
BAHAMA '29
4 TRITOB '27 8
DOMREP BARBAD '29 DOMREP '44
BAHAMA '24
6 DOMREP '21 DOMREP '45DOMREP '60
4/20/27 JAMAN '36
DOMREP '28 DOMREP '48
3 ARUBA '23 JAMAN 7/9/25 JAMAN '39 DOMREP '49
BERMUD '27 4 DOMREP '25 DOMREP '30 JAMAN '45
BERMUD '23 TRITOB '24 DOMREP JAMAN DOMREP
Modified Duration 1/28/24
2
BERMUD '24
2 DOMREP 10/17/25 1/25/27 Modified Duration
4/18/24 DOMREP '26
2 4 6 8 10 12 0 2 4 6 8 10 12 14 16 18
Source: Bloomberg and CIBC Capital Markets Source: Bloomberg and CIBC Capital Markets
Chart 6 Chart 7
Central America – Panama, Costa Rica, and El ELSALV ‘23s vs. COSTAR ‘23s
Salvador
YTM COSTAR '45COSTAR '44 350 5.0
7
ELSALV '50 300 4.0
ELSALV '34 Spread
COSTAR '43
6 ELSALV '41 250 Z-Score (RHS) 3.0
ELSALV '29 ELSALV '35
COSTAR '31 200 2.0
5 COSTAR '25
ELSALV '27
COSTAR '23 150 1.0
4 ELSALV '25 PANAMA '53
ELSALV '23 100 0.0
COSTAR '20 PANAMA '60
3 PANAMA '29 50 -1.0
PANAMA '27
PANAMA '30 PANAMA '47 0 -2.0
2 PANAMA '24 PANAMA '28
PANAMA '26 -50 -3.0
PANAMA '25
1 -100 -4.0
Modified Duration -150 -5.0
0
Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20
0 5 10 15 20 25
Source: Bloomberg and CIBC Capital Markets Source: Bloomberg and CIBC Capital Markets
Chart 8 Chart 9
COSTAR ‘44s vs. DOMREP ‘44s PANAMA ‘24s vs. BAHAMA ‘24s and BERMUD ‘24s
210 5.0 20
Spread 4.0
160 -30
Z-Score (RHS) 3.0
PANAMA '24s - BAHAMA '24s
2.0 -80
110 PANAMA '24s - BERMUD '24s
1.0 -130
60 0.0
-180
-1.0
10
-2.0 -230
-40 -3.0
-280
Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20
Feb-18 Jun-18 Oct-18 Feb-19 Jun-19 Oct-19 Feb-20
Source: Bloomberg and CIBC Capital Markets Source: Bloomberg and CIBC Capital Markets
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 7
Table 1
Public Sector Fiscal Accounts and Debt 2020 or 2020/21
Primary/Adjusted Nominal Gross Government Net Public Sector Real
2020 or 2020/21 Balance Balance Debt Debt GDP Growth
% of GDP % of GDP % of GDP % of GDP % of GDP
Antigua and Barbuda -0.8% -4.3% 90.1% n.a. 3.3%
Aruba 4.0% -0.8% 75.5% 49.4% 1.0%
The Bahamas -2.9% -5.9% 66.1% 62.4% -0.6%
Barbados 6.0% 2.9% 110.4% 105.6% 0.6%
Belize 1.9% -1.1% 90.4% 86.1% 2.1%
Bermuda 2.2% 0.4% 39.6% 0.5% 0.8%
Cayman Islands 1.9% 1.4% 7.6% n.a. 2.5%
Costa Rica -1.5% -6.0% 61% n.a. 2.5%
Dominica -3.2% -5.0% 82.0% n.a. 4.9%
Dominican Republic 0.2% -2.7% 40.0% n.a 5.5%
El Salvador 0.6% -3.0% 70.0% n.a. 2.3%
Grenada 6.2% 4.3% 54.5% n.a. 2.7%
Jamaica 6.7% 0.5% 91.0% 84.9% 1.0%
Panama -1.0% -2.75% 47.0% n.a. 4.2%
St. Kitts and Nevis -2.8% -4.3% 58.1% n.a. 3.5%
St. Lucia 0.7% -2.7% 69.6% n.a. 3.2%
St. Vincent and the Grenadines 0.4% -1.5% 70.6% 67.8% 2.3%
Suriname -2.7% -5.0% 68.5% 66.1% 1.4%
Trinidad and Tobago -2.4% -5.6% 64.2% n.a. 1.5%
Sources: IMF, Bloomberg, CIBC Capital Markets, Standard and Poor's, Moody’s.
NA: Not available.
Table 2
Ratings of Caribbean Sovereigns
Ratings Key
2019 Ratings Investment Grade High Yield
S&P Moody’s S&P Moody’s S&P Moody’s
Aruba BBB+ NA AAA Aaa BB+ Ba1
The Bahamas BB+ Baa3 AA+ Aa1 BB Ba2
Barbados B- Caa3 AA Aa2 BB- Ba3
Bermuda A+ A2 AA- Aa3 B+ B1
Cayman NA Aa3 A+ A1 B B2
Costa Rica B+ B2 A A2 B- B3
Dominican Republic BB- Ba3 A- A3 CCC+ Caa1
El Salvador B- B3 BBB+ Baa1 CCC Caa2
Jamaica B+ B2 BBB Baa2 CCC- Caa3
Panama BBB+ Baa1 BBB- Baa3 CC Ca
Suriname B B2 C C
Trinidad and Tobago BBB Ba1
*-: On review for downgrade
Sources: Bloomberg, S&P, and Moody’s
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 8
Table 3
Caribbean Bonds and Indicative Prices/Spreads (As of February 14, 2020)
Aruba
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
ARUBA 4 5/8 09/14/23 104.79 3.19% -16.45 110.72 BBB+ NR BBB-
Bahamas
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
BAHAMA 5 3/4 01/16/24 109.18 3.23% -52.19 172.19 BB+ Baa3 NR
BAHAMA 6.95 11/20/29 118.60 4.56% -29.96 300.87 BB+ Baa3 NR
BAHAMA 6 5/8 05/15/33 115.64 4.99% -31.61 336.86 BB+ Baa3 NR
BAHAMA 7 1/8 04/02/38 119.82 5.40% -8.97 372.86 BB+ Baa3 NR
Barbados
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
BARBAD 6 1/2 10/01/29 105.01 5.81% NA 406.99 B- NA NR
Bermuda
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
BERMUD 4.138 01/03/23 105.65 2.10% -8.57 61.77 A+ A2 WD
BERMUD 4.854 02/06/24 110.37 2.11% -10.41 64.70 A+ A2 WD
BERMUD 3.717 01/25/27 107.17 2.58% 2.21 105.39 A+ A2 NA
BERMUD 3.717 01/25/29 115.68 2.77% -0.78 118.98 A+ A2 NA
Costa Rica
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
COSTAR 4 1/4 01/26/23 100.49 4.07% -55.83 261.02 B+ B2 B+
COSTAR 4 3/8 04/30/25 99.95 4.39% -59.55 292.69 B+ B2 B+
COSTAR 6 1/8 02/19/31 104.86 5.53% NA 393.36 B+ B2 B+
COSTAR 5 5/8 04/30/43 91.85 6.30% -20.01 459.30 B+ B2 B+
COSTAR 7 04/04/44 104.83 6.60% -22.38 490.36 B+ B2 B+
COSTAR 7.158 03/12/45 106.46 6.63% -27.64 493.98 B+ B2 B+
Dominican Republic
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
DOMREP 7 1/2 05/06/21 103.56 4.44% 30.04 74.84 BB- Ba3 BB-
DOMREP 5 7/8 04/18/24 107.97 3.79% -22.68 175.50 BB- Ba3 BB-
DOMREP 6.6 01/28/24 111.84 3.37% -29.86 192.77 BB- Ba3 BB-
DOMREP 5 1/2 01/27/25 108.12 3.69% -22.57 225.56 BB- Ba3 BB-
DOMREP 6 7/8 01/29/26 115.27 3.97% -16.61 249.57 BB- Ba3 BB-
DOMREP 5.95 01/25/27 110.93 4.12% -8.72 263.74 BB- Ba3 BB-
DOMREP 8 5/8 04/20/27 122.48 4.87% -27.79 293.08 BB- Ba3 BB-
DOMREP 6 07/19/28 111.95 4.29% -6.58 278.18 BB- Ba3 BB-
DOMREP 4 1/2 01/30/30 101.72 4.29% NA 273.58 BB- Ba3 BB-
DOMREP 7.45 04/30/44 121.30 5.80% 12.31 411.35 BB- Ba3 BB-
DOMREP 6.85 01/27/45 114.30 5.76% 14.69 407.28 BB- Ba3 BB-
DOMREP 6 1/2 02/15/48 110.40 5.75% 16.31 405.75 BB- Ba3 BB-
DOMREP 6.4 06/05/49 109.21 5.75% 19.38 405.46 BB- Ba3 BB-
DOMREP 5 7/8 01/30/60 102.43 5.72% NA 403.70 BB- Ba3 BB-
El Salvador
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
ELSALV 7 3/4 01/24/23 110.65 3.87% -95.02 240.75 B- B3 B-u
ELSALV 5 7/8 01/30/25 107.80 4.12% -122.68 266.79 B- B3 B-u
ELSALV 6 3/8 01/18/27 110.08 4.65% -115.79 317.85 B- B3 B-u
ELSALV 8 5/8 02/28/29 123.38 5.33% -98.89 380.14 B- B3 B-
ELSALV 8 1/4 04/10/32 123.32 5.58% -98.94 397.55 B- B3 B-u
ELSALV 7 5/8 09/21/34 114.27 6.13% -77.04 448.89 B- B3 B-u
ELSALV 7.65 06/15/35 117.14 5.93% -90.78 429.33 B- B3 B-u
ELSALV 7 5/8 02/01/41 117.03 6.17% -76.84 448.59 B- B3 B-u
ELSALV 7.1246 01/20/50 110.27 6.35% -55.80 465.82 B- B3 B-
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 9
Jamaica
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
JAMAN 7 5/8 07/09/25 118.79 3.74% -37.95 151.91 B+ B2 B+u
JAMAN 9 1/4 10/17/25 128.28 3.67% -20.38 221.61 B+ B2 B+u
JAMAN 6 3/4 04/28/28 118.91 4.02% -27.78 223.25 B+ B2 B+u
JAMAN 8 1/2 02/28/36 138.17 5.01% -55.12 337.11 B+ B2 B+u
JAMAN 8 03/15/39 139.02 4.84% -63.68 310.16 B+ B2 B+u
JAMAN 7 7/8 07/28/45 138.07 5.17% -44.09 348.46 B+ B2 B+u
Panama
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
PANAMA 4 09/22/24 108.07 2.14% -9.04 60.97 BBB+ Baa1 BBB
PANAMA 3 3/4 03/16/25 107.28 2.23% -5.55 71.44 BBB+ Baa1 BBB
PANAMA 7 1/8 01/29/26 126.65 2.30% -10.77 84.39 BBB+ Baa1 BBB
PANAMA 8 7/8 09/30/27 143.84 2.51% -8.79 102.90 BBB+ Baa1 BBB
PANAMA 3 7/8 03/17/28 110.33 2.46% 7.35 92.71 BBB+ Baa1 BBB
PANAMA 9 3/8 04/01/29 154.12 2.65% -5.06 112.98 BBB+ Baa1 BBB
PANAMA 3.16 01/23/30 105.53 2.53% 9.14 97.37 BBB+ Baa1 BBB
PANAMA 6.7 01/26/36 143.84 3.17% 11.86 139.96 BBB+ Baa1 BBB
PANAMA 4 1/2 05/15/47 123.55 3.20% 5.69 146.07 BBB+ Baa1 BBB
PANAMA 4 1/2 04/16/50 123.12 3.29% 8.20 154.22 BBB+ Baa1 BBB
PANAMA 4.3 04/29/53 121.55 3.24% 6.88 153.23 BBB+ Baa1 BBB
PANAMA 3.87 07/23/60 112.51 3.31% 10.35 160.89 BBB+ Baa1 BBB
Suriname
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
SURINM 9 1/4 10/26/26 84.97 12.64% 130.27 1085.94 B B2 NR
Trinidad and Tobago
Bond Price Yield 3m Yield Change Z-Spread S&P Moody's Fitch
TRITOB 9 3/4 07/01/20 102.83 1.94% 16.30 1.68 BBB Ba1 NR
TRITOB 4 3/8 01/16/24 106.88 2.52% -83.00 104.61 BBB Ba1 NR
TRITOB 4 1/2 08/04/26 108.63 3.02% -93.91 154.44 BBB Ba1 NR
Source: Bloomberg and CIBC Capital Markets
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 10 Caribbean Economic Review CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020
Caribbean Market Overview – Q1 2020 11
2-
Caribbean Economic Review Tiffany Grosvenor-Drakes
CIBC FirstCaribbean
Increased tariffs, weakened global trade, and geopolitical tensions characterised the global economic environment in
2019. Against this backdrop, major central banks adopted more accommodative monetary policy aimed at supporting
aggregate demand. In its January 2020 World Economic Outlook, the IMF estimates that global growth decelerated from
3.6% in 2018 to 2.9% in 2019, the slowest pace since 2009, reflecting a weaker performance of both advanced economies
(from 2.2% in 2018 to 1.7% in 2019) and emerging markets and developing economies (from 4.5% in 2018 to 3.7% in
2019). Among the region’s major trading partners, real GDP growth is estimated to have moderated in the US and Canada
from 2.9% and 1.9% to 1.3% and 1.5%, respectively, while growth likely remained relatively stable in the UK at 1.4%.
Meanwhile, oil prices averaged 10.9% lower in 2019 relative to 2018 as greater production in the US restricted the effects
of production cuts by OPEC and geopolitical tensions in the Middle East. Further, even though oil prices spiked following
the US military operation in Iraq in January 2020, the increase appeared to have been short-lived amid abundant supply,
with the price of WTI crude oil falling 15.6% since December 2019 to US$52 per barrel by the end of January.
The slowdown of the region’s major trading partners, alongside persistent drought conditions and domestic operational
difficulties, led to slower growth in about half of the region’s markets thus far in 2019. In contrast, data available to date
suggest that activities related to the emerging energy sector strengthened Guyana’s economic performance, while
delayed recovery from the 2017 hurricanes resulted in a stronger performance and a rebound in economic activity in
Dominica and Sint Maarten, respectively. Regional tourism activity continued apace as total stay-over arrivals rose 15.8%
y/y during January to September 2019, reflecting growth across all markets except Bermuda. Further, cruise passenger
arrivals also expanded, but fell in those markets that received a temporary boost in 2018 due to diversions from hurricane-
hit markets. Although The Bahamas recorded a robust tourism performance over the first nine months of the year, visitor
arrivals in September specifically fell 12.8% y/y in the aftermath of Hurricane Dorian. Meanwhile, economic output
contracted in Curacao and Trinidad and Tobago during H1 2019. Despite recent tourism gains, Curaçao’s economy
remained in a prolonged recession largely due to reduced refinery activity, while the continued decline of the oil sector,
disruptions to natural gas production and sluggish non-energy output reduced economic activity in Trinidad and Tobago.
Lower global energy prices and slower domestic demand constrained regional consumer price inflation during the 12
months ended September 2019. Regional consumer prices rose 1.5% y/y, a modest deceleration from 2.1% y/y one year
earlier and reflecting higher prices in all markets except Belize, St. Kitts and Nevis and St. Lucia, where declines in the
price of housing, utilities, gas and other fuels outweighed increases in other price categories. Further, prices accelerated
y/y in Barbados only, largely attributed to the effect of drought conditions and seafood scarcity on food prices, as well as
higher transportation costs. Meanwhile, reduced energy import bills coupled with greater tourism receipts led to FX
reserve accumulation in most markets. Reinsurance receipts also boosted reserves in the Bahamas, while reserves in
Barbados benefitted from greater funding from international financial institutions. Conversely, large external current
account deficits in Belize continued to limit FX reserves’ growth recorded at just below three months of imports of goods
and services, while the downward trajectory in Trinidad and Tobago persisted to date.
Chart 1 Chart 2
Trends in Regional1 Tourist Arrivals Regional2 Loan Growth (y/y; %)
15 12-mth moving (mln) 20
Total Stay-Over Arrivals (R)
13 average Retail Loans
Growth in Tourist Arrivals (L) 15
11 growth (%)
Corporate Loans
9 10
7
5 5
3
1 0
-1
-5
-3
-5 -10
Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
Source: Caribbean Tourism Organization, Eastern Caribbean Central Bank and CIBC FirstCaribbean. Source: Regional authorities and CIBC FirstCaribbean.
1 Caribbean region includes: Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia,
St. Maarten and St. Vincent and the Grenadines.
2 Caribbean region includes: Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Barbados, Belize, Curaçao, Dominica, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia, St. Maarten, St. Vincent and the Grenadines, Trinidad and Tobago, and
Turks and Caicos Islands.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 12
2-
Regional governments recorded mixed fiscal performances, as eight of 20 markets registered weaker fiscal balances, two
of which still recorded surpluses. Specifically, a fall-off in Citizenship by Investment (CBI) inflows contributed to the fiscal
deterioration in Dominica and St. Lucia, while revenue collected in Antigua and Barbuda dipped even with greater CBI
receipts. Meanwhile, capital expansion worsened the fiscal accounts in St. Vincent and the Grenadines, while the fiscal
deficits of Belize and Suriname deteriorated during the period despite fiscal consolidation efforts. In contrast, the
Bahamian Government slashed its deficit by one-third during Q1 of FY 2019/20 ended September 2019. However, the
Government reported that the expected revenue loss coupled with the necessary capital outlays and spending on social
services following Hurricane Dorian will likely produce a fiscal deficit of 5.3% of GDP for FY2019/20, about five times the
Pre-Dorian target of 1% under its Fiscal Responsibility Law (FRL). Overall, debt rose in approximately half the markets, as
only nine of the 20 countries – Anguilla, Barbados, Cayman Islands, Curacao, Grenada, Guyana, Jamaica, St. Kitts and
Nevis and Turks and Caicos Islands – registered fiscal surpluses during the period.
Loan balances continued to advance, with 13 of 20 markets experiencing growth between September 2018 and
September 2019. Total loans and advances rose 4.2% y/y at September 2019, led by greater than 8% growth in Antigua
and Barbuda, Aruba, Jamaica and Trinidad and Tobago. Retail loans rose 4.9% y/y, largely reflecting greater mortgage
lending, while corporate loans increased 3.4% y/y. Further, loan delinquency improved in all markets except Anguilla and
St. Kitts and Nevis, where the non-performing loan ratios remained elevated at 23.3% and 24.7%, respectively.
Lower-than-expected domestic demand in a few emerging markets, India in particular, has prompted the IMF to revise
downward its global growth forecast for 2020 by 0.2 percentage points. Notwithstanding, the IMF suggests that the global
environment may be approaching its turning point, as the factors that slowed manufacturing activity and global trade are
appearing to wane in the face of recent improvement in US-China trade relations and retreated fears of a hard Brexit. On
the back of a supportive financial environment, the IMF projects that global growth will rise to 3.3% in 2020. These
developments suggest that Caribbean economies will likely continue to advance in 2020. Real GDP growth in Guyana, in
particular, is expected to surge given the commencement of oil production in December 2019. However, economic output
could likely experience a small contraction in The Bahamas pending the boost from the rebuilding on Grand Bahama and
Abaco Islands, while an agreement with the Klesch Group to operate the Isla refinery should improve economic prospects
for Curaçao. Finally, while some risks to global growth have subsided, the recent outbreak of the coronavirus has the
potential to disrupt economic activity in China. And, depending on its severity and reach, it could disrupt global travel and
stymie global economic growth.
Chart 3
Regional3 Inflation and Intl. Commodity Prices (y/y; %)
5 Regional Inflation Rate (L) 110
Growth in International Oil Prices* (R)
90
4 Growth in International Food Prices+ (R)
70
3 50
30
2
10
1 -10
-30
0
-50
-1 -70
Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
Source: Regional authorities, International Monetary Fund and CIBC FirstCaribbean.
* Average of U.K. Brent, Dubai and West Texas Intermediate + International Monetary Fund Food Index.
3Caribbean region includes Anguilla, Antigua and Barbuda, Aruba, Barbados, Belize, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia, St. Maarten, St.
Vincent and the Grenadines and Trinidad and Tobago.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 13
2-
Anguilla Tiffany Grosvenor-Drakes
CIBC FirstCaribbean
Production, Prices, and Employment
Indicators of tourism activity suggest that the economic recovery was likely sustained during H1 2019; however, the
construction and investment boost following Hurricane Irma’s destruction is beginning to fade.
Tourism activity continued to rebound, with the total number of visitor arrivals and visitor expenditure advancing
157.1% y/y and 86.5% y/y, respectively, during H1 2019. The number of stay-over tourists from the US, the
largest source market, rose 185.9% y/y, while the number of visitors from Canada, the UK, the Caribbean and all
other markets also grew, up 150.4% y/y, 145.1% y/y, 14.8% y/y, and 156.1% y/y, respectively. The number of
excursionists also rebounded 180.2% y/y, likely connected to the resumption of cruise ship calls to Sint Maarten,
the main gateway for Anguilla.
Preliminary indicators suggest a likely weakening of investment activity as imports of inedible crude materials
except fuels fell 3.8% y/y and imports of machinery and transport equipment declined 7.4% y/y following
expansions of 51.8% y/y and 54.4% y/y, respectively. Further, capital outlays by the Government shrunk by more
than half during the six-month period. However, the merchandise trade deficit improved US$168.1mln to a
US$91.4mln surplus, reflecting the combined effect of a 7.9% y/y decline in total imports and a 79.3% y/y
expansion in total exports.
Meanwhile, a 9.1% y/y reduction in commercial bank loan balances over H1 2019, attributed to most public sector
projects being funded by the UK Government and the risk-averse position of commercial banks, suggests a
contraction in the financial intermediation sector.
Consumer prices rose 1.9% y/y during September 2019, reflecting higher prices for food and non-alcoholic beverages (up
2.7% y/y), housing, utilities, gas and fuels (up 0.2% y/y), communication (up 3.0% y/y) and transport (up 5.8% y/y).
Developments in Financial Markets
Declining loan balances increased excess liquidity over the four quarters ended September 2019. Loan quality and capital
adequacy worsened during the same period.
Lending to businesses and the public sector fell 16.4% y/y and 74.4% y/y, respectively, lowering corporate loans
20.6% y/y. Retail loan balances also declined (down 7.3% y/y), reducing total loans and advances 13.2% y/y.
Total deposits slipped 0.9% y/y, reflecting a 22.1% y/y fall-off in non-resident deposits and 2.7% y/y decline in
corporate deposits, which overshadowed a 1.1% y/y increase in retail deposits.
Consequently, the loan-to-deposit ratio declined 6.5 percentage points y/y to 45.6% at the end of September
2019. The weighted average lending rate fell 5bps y/y to 9.81%, but the weighted average deposit rate rose 21bps
y/y to 2.44%, reducing the spread 26 bps y/y to 7.37% at the end of the same period.
Chart 1 Chart 2
Stay-Over Tourist Arrivals (y/y; %) Inflation (y/y; %)
2,250 (US$/person) (000's)105 5 All Items
Food
2,200 95 4 Fuel and Light
2,150 85 3
2,100 75 2
2,050 65 1
0
2,000 55
Visitor Expenditure/person - 12-month average (L)
-1
1,950 Stay-Over Arrivals (R) 45
-2
1,900 35
Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 -3
2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 2019Q3
Source: Caribbean Tourism Organization, Eastern Caribbean Central Bank and CIBC FirstCaribbean. Source: Eastern Caribbean Central Bank and CIBC FirstCaribbean.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 14
2-
The non-performing loan ratio worsened from 21.0% in September 2018 to 23.3% in September 2019, while regulatory
capital to risk-weighted assets fell 2.5 percentage points y/y to 16.6%. However, the annualised return on average assets
improved to 0.96% at September 2019 from -0.21% one year earlier.
Government Debt
Greater revenue collections, particularly on domestic goods and services, improved the government’s fiscal surplus by
US$8.1mln y/y to US$9.1mln during the first six months of 2019.
Increased taxes on income and profits (up US$0.6mln or 22.1% y/y), property (up US$1.5mln or 260.8% y/y),
domestic goods and services (up US$6.8mln or 72.5% y/y), and international trade and transactions (up
US$1.8mln or 10.4% y/y) raised total tax revenue by 36.1% y/y. Specifically, the robust expansion in visitor
arrivals over H1 2019 underpinned greater accommodation tax receipts and led to increased collections from
goods and services. However, a US$0.4mln (5.5% y/y) fall-off in non-tax revenue moderated the expansion in
current revenue to US$10.3mln (28.1% y/y), while no grant inflows were recorded compared to US$1.5mln one
year earlier.
Total current spending advanced US$1.4mln (4.0% y/y). Expenditure on goods and services, interest payments,
and transfers and subsidies rose US$1.5mln (18.7% y/y), US$0.2mln (7.0% y/y) and US$0.4mln (4.6% y/y),
respectively, but outlays on personal emoluments fell US$0.7mln (4.4% y/y). When combined with a US$0.7mln
(56.7% y/y) fall-off in capital spending and net lending, total expenditure rose 2.1% y/y to US$37.8mln.
The stock of public debt fell 1.6% y/y to US$183.9mln (57% of GDP) at the end of June 2019.
Outlook
Following 10.9% growth in 2018, the Eastern Caribbean Central Bank (ECCB) projects an 8.8% real GDP expansion in
2019. Despite the slowing momentum of global economic growth and the completion of most of the reconstruction work to
hotels and restaurants, the ECCB expects that strong growth in tourism output, along with greater public sector
investment, will sustain the expansion. Further, the increase in tourism activity is likely to support greater output in
wholesale and retail trade, transport storage and communication, and electricity gas and water production.
Chart 3 Chart 4
Public Sector Debt Outstanding Growth in Key Balances (y/y; %)
250 (US$mln) 20
10
200
0
150 -10
Loans
-20
Deposits
100 -30
-40
50
-50
0 -60
2015Q2 2016Q2 2017Q2 2018Q2 2019Q2 2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 2019Q3
Source: Eastern Caribbean Central Bank and CIBC FirstCaribbean. Source: Eastern Caribbean Central Bank and CIBC FirstCaribbean.
CIBC Capital Markets & CIBC FirstCaribbean International Bank February 2020Caribbean Market Overview – Q1 2020 15
2-
Antigua and Barbuda Tiffany Grosvenor-Drakes
CIBC FirstCaribbean
Production, Prices, and Employment
Robust tourism activity likely pillared improved economic activity in Antigua and Barbuda during H1 2019, but preliminary
data from the Eastern Caribbean Central Bank (ECCB) suggest a slower pace relative to the similar period in 2018.
Stay-over tourism activity continued to expand, with arrivals from the US, the UK, the Caribbean and all other
markets increasing 17.7% y/y, 6.7% y/y, 9.5% y/y and 24.5% y/y, respectively. However, Canadian arrivals dipped
3.1% y/y during H1 2019. While total stay-over arrivals advanced 11.4% y/y, the number of cruise-ship passenger
arrivals contracted 8.8% y/y, reflecting the return to normal levels following an expansion associated with port
disruptions in hurricane-affected markets, while yacht arrivals dipped 0.1% y/y. Notwithstanding, total visitor
spending increased 12.9% y/y during the period.
Preliminary indicators of construction and investment activity suggest a likely moderation. Imports of machinery
and transport equipment rose 14.5% y/y, but imports of inedible crude materials except fuels declined 18.7% y/y.
Further, the volume of cement imports advanced 14.3% y/y, slower than the 44.4% y/y expansion recorded one
year earlier, while government spending on capital works slipped US$1.7mln (12.1% y/y) during H1 2019.
Total imports increased US$32.5mln and overshadowed a US$16.9mln expansion in total exports to widen the overall
merchandise trade deficit 1.8% y/y to US$878.8mln.
Higher prices for food and non-alcoholic beverages (up 1.2% y/y) and transport (up 0.6% y/y) lifted consumer prices 0.6%
y/y at September 2019.
Developments in Financial Markets
Strong loan growth led to reduced excess liquidity over the four quarters to September 2019. Banks’ loan quality,
profitability and capital adequacy improved during the period.
Increased lending to businesses (up 36.8% y/y) eclipsed a 5.9% y/y fall-off in public sector lending, lifting
corporate loans 17.8% higher y/y. When combined with a 1.6% y/y expansion in retail loans, total loans advanced
9.8% y/y.
Total deposit balances slipped 1.7% y/y as a 4.8% y/y decline in retail deposits overshadowed 0.9% y/y and
15.1% y/y expansions in corporate and non-resident funding, respectively.
As a result, the loan-to-deposit ratio increased 7.4 percentage points y/y to 70.4% at September 2019, while the
weighted average lending and deposit rates rose 5bps y/y and 12bps y/y to 8.58% and 1.57%, respectively, at the
end of the same period.
Chart 1 Chart 2
Stay-Over Tourist Arrivals Inflation (y/y; %)
3,000 (US$/person) (000's) 280 5 All Items (L)
4 Food (L)
270
2,500 3
260
2
2,000 250 1
240 0
1,500 Visitor Expenditure/person (L)
-1
Stay-Over Arrivals (R) 230
-2
1,000 220 -3
Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 2019Q3
Source: Eastern Caribbean Central Bank and CIBC FirstCaribbean, Caribbean Tourism Organization. Source: Eastern Caribbean Central Bank and CIBC FirstCaribbean.
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