(Jamaica Gleaner) – Claiming Jamaica appears close to defaulting on its debts, ratings agency Moody’s Investors has downgraded the country’s local and foreign currency bonds from B2 to Caa1 with a negative outlook.

Yesterday, Moody’s said delays in reaching an agreement with the International Monetary Fund (IMF) factored in the downgrade.

“After several months of negotiations with the IMF and the various statements indicating progress, there are signs that an agreement with the IMF may not be within reach yet,” the ratings agency noted. Alessandra Alecci, vice-president and senior analyst at Moody’s, said the IMF agreement was crucial to “maintain confidence, meet this year’s government funding needs and provide foreign currency inflows to sustain the external position”.

The Moody’s markdown follows on the heels of Standard and Poor’s (S&P) downgrade of Jamaica’s bonds to triple C with a negative outlook two weeks ago.

A ‘CCC’ rating signals that the ratings agency sees the debt issuer as ‘vulnerable’, and is an alert to investors that there could be interruption in servicing of the debt.

Moody’s judges obligations rated Caa1 as of “poor standing and are subject to very high credit risk”.

Finance Minister Audley Audley Shaw, in seeking to reassure the country and the international community, continued to say discussions with the IMF were going well.

“The Government continues to be in fulsome discussions with the IMF and we are confident that we will shortly be able to make the proper announcement, as indicated by the prime minister in his speech on Sunday,” said Shaw. On Sunday, Prime Minister Bruce Golding said the agreement might be in place by Christmas.