RATIONALE SUMMARY

Caribbean Information and Credit Rating Services Limited (CariCRIS), the Caribbean regional credit rating agency, has lowered its ratings on the debt issue of the size of USD 30 million of Eastern Caribbean Home Mortgage Bank (ECHMB) by one notch to CariAA- (Foreign Currency Rating) and CariAA- (Local Currency Rating) on its regional rating scale. These ratings indicate that the level of creditworthiness of this obligation, adjudged in relation to other obligations in the Caribbean, is high.
 
The downgrade is driven mainly by the negative impact of the ongoing recession on the business environment in which the Bank operates, manifested in the tightening liquidity conditions being experienced by the indigenous banking sector across the Eastern Caribbean Currency Union (ECCU).  High liquidity of the last few years have tightened as a result of the decline in economic activity and the waning of investor and business confidence as well as a higher risk aversion from the shocks to the financial sector both globally and regionally.  The increasing exposure to the non-bank financial institutions (NBFIs) in the ECCU, which generally have a lower credit risk profile relative to its commercial bank counterparts, also poses downside credit risks for ECHMB.  Additionally, ECHMB’s tardiness in the re-registration of its replaced loans increases its risk as the company has no legal ownership of these mortgages and will have no recourse if the Primary Lender (PL) fails.
 
The high creditworthiness of ECHMB continue to reflect the Bank’s low credit risk business model, excellent asset quality and its status as a regional financial institution with support from the premiere financial institution in the ECCU.  Also supporting the rating is the highly experienced and qualified management team which is well supported by a reputable Board of Directors (BOD).  Additionally, ECHMB’s operational and underwriting systems are strong, underpinned by its legislative and operational framework.  The ratings are tempered by the challenging market conditions and relatively high exposure in a couple of markets which contributes to a fair degree of geographic asset concentration.  In addition, there are constraints on ECHMB’s resource–raising ability via public issues by competition from both corporates and sovereigns in the ECCU.

Detailed Rating Rationale on ECHMB

Contacts:
Arjoon Harripaul
Tel: 868-627-8879
Email: aharripaul@caricris.com
Website: www.caricris.com

Sherry Ann Persad
Tel: 868-627-8879
Email: spersad@caricris.com
Website: www.caricris.com 
 
Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval.  CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/users/transmitters/distributors of this product.