12212016 business

WEDNESDAY, DECEMBER 21, 2016

business@tribunemedia.net

$3.85

$3.90

$3.86

Bahamas receives ‘junk’ Xmas present from S&P

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

Standard & Poor’s (S&P) yesterday gave the Bahamas a ‘junk’ creditworthiness downgrade for Christmas, raising alarm that this nation’s economic and fiscal woes are taking it “over the precipice”.

S&P’s action, based on the Bahamas’ weaker economic growth and slower fiscal consolidation pace, means that this nation has lost its all-important ‘investment grade’ status with one of the world’s leading credit rating agencies.

The ‘one notch’ drop, from ‘BBB-/A3’ to ‘BB+B’, will immediately send a negative message to the world’s capital markets, and investors in both Bahamian government debt and this nation’s economy, potentially impacting every Bahamian.

An S&P spokesman, in an email to Tribune Business, confirmed that the rating agency had effectively cut the Bahamas’ creditworthiness to ‘junk’ status.

Explaining what its action meant, he said: “The rating of BBB- is considered the lowest rating in ‘investment grade’, so the rating of BB+ (which is one

notch below that) would be the highest rating in the ‘speculative grade’ category (which many in the market call ‘junk’ per your question, although we don’t use that term).”

S&P, in a report obtained by Tribune Business, justified the ‘junk’ downgrade on the basis that it is now projecting the Bahamian economy will only grow by 0.3 per cent this year, down from its 1.2 per cent estimate in April.

The rating agency added that lower GDP/economic growth would also negatively impact the Government’s tax revenues See pg b6

Nation loses treasured ‘investment grade’ status Weaker growth, fiscal progress cited as rationale Loretta: ‘We’re obviously over the precipice’ Chamber chief: ‘It’s a real wake-up call’

Govt slams S&P for ignoring Business confidence ‘appalling’, says ex-Tax Coalition chief $1bn Baha Mar impact

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Government last night slammed Standard & Poor’s (S&P) decision to cut the Bahamas’ creditworthiness to ‘junk’ status, arguing that it had failed to “fully consider” growth-enhancing initiatives such as $1 billion in upcoming capital investments at Baha Mar. In a predictable response, the Christie administration accused the credit rating agency of failing to give “appropriate weight” to developments and initiatives already underway to boost job creation and economic activity in the Bahamas.

Its statement, though, did not identify any of these initiatives by name other than the restart at Cable Beach and, when broken down, is effectively saying that all the Bahamas’ ‘eggs’ remain very much in the Baha Mar basket.

And it sought to downplay the loss of the Bahamas’ investment grade credit rating, pointing to countries such as Portugal, Russia, Bulgaria and Indonesia, which all have the same ‘BB+’ speculative or junk - credit rating.

Agency did not give ‘sufficient weight’ to growth plan But response shows everything hinges on Baha Mar Long on promises, but very few specifics Expressing its disappointment with the credit rating agency, the Christie administration said: “The Government.... is of the view that S&P’s decision does not give appropriate weight to important developments on the ground, nor the Bahamas’ strong commitment to address its economic and fiscal challenges.”

Its statement, though, gave few specifics and details, and S&P will likely want to see ‘more action, less talk’ from the Government before reversing a trend that has seen the Bahamas suffer continual credit See pg b4

Chamber chief urges: ‘Stop finger pointing’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Chamber’s chief executive yesterday urged Bahamians to “stop finger pointing” and instead develop “workable solutions” to this nation’s economic and fiscal woes, in the wake of Standard & Poor’s (S&P) ‘junk’ downgrade.

Edison Sumner told Tribune Business that Bahamians had traditionally been quick to blame and identify problems, but often came up sort on identifying and implementing solutions to solve such difficulties.

“I cannot stress enough the importance of everyone working together; not necessarily finger pointing - we’ve done that very well,” Mr Sumner said in the wake of S&P dropping the Bahamas’ ‘investment grade’ credit rating.

“The hard work is not in the finger pointing; the hard work is in identifying the solutions and implementing them.

“We’ve done very well in identifying the problem, telling the Government collectively what it’s done wrong.

The Chamber today seeks to not only identify challenges and problems, but to identify very workable solutions to those problems. That’s the path we’re on.”

S&P’s move to downgrade the Bahamas’ sovereign creditworthiness from ‘BBB-/A3’ to ‘BB+/B’ has

Workable solutions needed after S&P downgrade Hoping political parties will adopt its position S&P sets great store by political continuity dropped this nation’s status to ‘speculative’ or ‘junk’, and represents another warning on its need to urgently alter course with economic and fiscal reforms.

Mr Sumner, meanwhile, told Tribune Business that the Chamber was “formulating a position paper” now on what it perceives as essential business and economic reforms.

This will be presented to “the entire political directorate”, Opposition parties as well as the Government, in the hope that some - if not all - of the proposals make their way into campaign manifestos for the upcoming 2017 general election.

“We expect they will take the Chamber’s position seriously and into account,” Mr Sumner said.

Political stability and continuity, regardless of who wins the upcoming election, factored heavily into S&P’s analysis of the Bahamas’ See pg b3

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

The Coalition for Responsible Taxation’s (CRT) first chairman yesterday said the Bahamas’ downgrade to ‘junk’ status was likely to suck funding away from essential public services, and described business confidence as “appalling”.

Robert Myers, reacting to Standard & Poor’s (S&P) latest downgrade of the Bahamas’ sovereign creditworthiness, warned that the loss of ‘investment grade’ status would force this nation to pay more for its foreign currency borrowings.

Explaining how the downgrade’s reputational damage is likely to affect all Bahamians, Mr Myers told Tribune Business: “The concern is that when you go to ‘junk’, it triggers a series of events where certain institutions are not able to invest in your bonds because of that status.

“When that happens, other See pg b5

S&P ‘junk’ move to suck funds from public services ORG principal: Debt, servicing costs to increase NDP Plan ‘lacks means to get us there’

Robert Myers

Loretta ButlerTurner

$3.89

K Peter Turnquest

Loretta: S&P move shows Govt breach of ‘fiduciary duty’ House leader slams four-year fiscal ‘song and dance’ KP: ‘Junk’ cut ‘doesn’t say much for our economy’ Says action ‘reflects state of where we are’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Bahamas’ downgrade to ‘junk’ status “seriously calls into question” whether the Government has breached its fiduciary duty to the public, the Opposition’s House of Assembly leader charged yesterday.

Loretta Butler-Turner told Tribune Business that the primary responsibility of any government was to ensure “the ship of state remains in a state of buoyancy”, but this was now being challenged

by Standard & Poor’s (S&P) latest rating action.

Mrs Butler-Turner also accused the Christie administration of performing “a song and dance” over the past four-anda-half years by frequently lauding its fiscal consolidation efforts, only to repeatedly fail to deliver on its projections.

“This demonstrates more than ever that we need a government with a plan to resuscitate this country from where the PLP has led us,” Mrs Butler-Turner said of S&P’s decision to strip this nation of its ‘investment grade’ rating.

“The Government for the last four years has been giving us a song and dance about bringing down the deficit and debt, See pg b4

PAGE 2, Wednesday, December 21, 2016

THE TRIBUNE

Golf tournaments will give 2,200 room boost Two golf tournaments are expected to generate 2,200 room nights for Abaco and Exumabased hotels when they are held next month.

More than 100 golfers are set to tee off at The Bahamas Great Exuma Classic and The Bahamas Great Abaco Classic next month.

The Bahamas Great Exuma Classic will take place at Sandals Emerald Bay Golf Course from January 5-11, while The Bahamas Great Abaco Classic will take place at the Abaco Club from January 19-25.

Golf fans worldwide will also get a glimpse of the “true Bahamas” when they see the 132 golfers play. The tournaments will be carried live on the Golf Channel and broadcast to 100 million homes in 150 countries.

Joy Jibrilu ,the Ministry of Tourism’s director-general, said: “There are so many boxes that

are being ticked as we look at the value of such a partnership.

“We look at the people who are coming. There are approximately 132 who will come and compete; they don’t come alone. You’re talking about caddies, you’re talking about coaches and you’re talking about families. So that number increases exponentially.

“And that equates to 2,229 room nights, and that’s for each of those tournaments. So I cannot say sufficiently how very happy we are to be a part of this historic event.What a great way to start 2017.”

Bd Global, an event management and public relations firm, worked with the Ministry of Tourism to bring the Web.com Tour to the Bahamas.

“We’re set for a terrific run on both of the islands,” said Brooks Downing, bd Global’s president.

“It’s going to have great impact.

“We talk about the events being an economic driver in the local communities, but it will also create that platform, thanks to the golf channel. And it’s great exposure where we can maximise future travel and future heads in bed, and really show what the true Bahamas is about when you go to Exuma and go to Abaco.

“People are going to know what

Sun rises on Sunryse data protection bid

the swimming pigs are. People are going to know what the Abaco Parrot is. It’s going to be a tremendous experience. It’s going to be a postcard for all of the Bahamas.”

Both tournaments will feature 132-player fields and $600,000 in prize money. The winner of each event will receive a $108,000 purse.

Sunryse Information Management partnered with RBC Royal Bank for its ninth annual ‘Shred Day’, in a bid to promote information protection and support local charities.

The event, which was held at the Western Esplanade, Arawak Cay, was designed to promote the importance of safely disposing of sensitive documents to guard against identity theft.

It was also used to generate support for two charities, the Sister Sister Breast Cancer Support Group and the HeadKnowles Foundation.

Bahamians brought their sensitive documents, such as old bills, invoices and bank statements, to be securely shredded free of charge.

Sunryse Information Management offered $1 in donations to the charities for each 10 pounds of shredded paper. RBC Royal Bank, serving as chief corporate sponsor, offered to match every dollar donated up to $2,500.

Chris Sawyer, Sunryse Information Management’s president, said: “Shred Day is a way for us to engage the public and increase their understanding on the importance of the proper disposal of confidential records.

“It’s also one of the major ways our company gives

The Bahamas is now home to four professional golf tournaments, which is more than all but three states in the US. The Hero World Challenge, hosted by Tiger Woods, was held at Albany in New Providence earlier this month, and the Pure Silk Classic will be held at the One & Only Ocean Club on Paradise Island in January.

back to the community.

This year, we were pleased to work with RBC to expand our efforts to provide financial assistance to Sister Sister Breast Cancer Support Group, and to HeadKnowles’ Hurricane Matthew relief and recovery efforts.”

Members of RBC Royal Bank’s business team were available to assist with preparing documents for disposal, as well as distributing material on the importance of taking anti-phishing initiatives.

Mr Sawyer said: “Success in business largely depends on establishing solid partnerships and having partners who believe in your vision, even when your vision is still a dream.

“I’ve been a business banking client of RBC for almost two decades, and I value the team’s approach to backing and supporting growing enterprises. When I needed help, my partners at RBC were there to help me overcome the challenges all SME’s faced.”

Mr Sawyer credited the success of this year’s Shred Day to the growing support of partners such as RBC Royal Bank, as well as Starbucks Bahamas and Bahama Subs.

“Beyond the business,

our partners have demonstrated their commitment to supporting great causes, including our major giveback event - Shred Day,” he added.

“We share the common belief that giving back to the community is essential in helping it grow and develop. And we hope that through these partnerships we can continue to increase our contributions to similar worthwhile organisations.“ Jerome Pinder, RBC Royal Bank’s head of business banking, said: “On behalf of RBC Royal Bank, we are proud to partner as a co-sponsor of an event that seeks to create awareness around the importance of protecting sensitive information by carefully disposing of it, and also because of its community-minded nature.

“We pride ourselves in helping our clients thrive and communities prosper.

Therefore, we commend our clients at Sunryse for their consistent effort to further educate and develop our communities here in the Bahamas. We look forward to an ongoing partnership with this innovative organisation, Sunryse Information Management.”

Photo/Kovah Duncombe Pictured L to R: Chris Sawyer, president, Sunryse Information Management; Nadine Sawyer, chief financial officer, Sunryse Information Management; Andrea Sweeting of Sister Sister Breast Cancer Support Group, RBC Royal Bank representatives, Chandra Gilbert and Tanya Hutchinson.

THE TRIBUNE

Wednesday, December 21, 2016, PAGE 3

Union focused on law changes, not Labour Minister

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A top hotel union executive said it did not want to get into a “back and forth” with the Minister of Labour over his claims that it bore responsibility for the One & Ocean Club lay-offs, stressing that it was instead focused on pushing for Industrial Relations Act amendments.

Shane Gibson had blamed the Bahamas Hotel, Catering and Allied Workers Union (BHCAWU) for the termination of the 61 employees, saying the union had missed the deadline to submit amendments it wanted to negotiate with resort employers for a new industrial agreement. As a result, the old deal expired, and the employers continued as if the old agreement was still in place.

But BHCAWU secretary-general, Darren Woods, declined to hit back at the minister yesterday. “You don’t want to be in a back and forth in the press with the minister of labour. He might have just been blowing off steam. I chalk it up to him just being ticked off a bit,” Mr Woods said.

He added that the union was still attempting to get a meeting with the One & Only Ocean Club over the terminations.

“We are still trying to get a meeting. That hasn’t happened as yet. That is something that we need to get resolved as soon as possible,” Mr Woods said.

“There needs to be amendments to the Industrial Relations Act, which is something that we would have been working on since mid-year. Our recommendations for amendments to the law were made to the Tripartite Council, and then will go on to the Minister and the Parliament.

“One of the amendments we were talking about was recognitions; what happens when the union gains recognition. Right now, the union gains recognition but there is no timeframe in order for the company to come to the table to sit down and negotiate with the union.”

The Tribune reported back in September that the Government wanted to bring “emergency legis-

lation” to Parliament that would make it a criminal offence for employers to fail to consult or notify the relevant minister or bargaining agent about their intention to make 10 or more workers redundant.

The Government has also recommended that employers consult the minister and bargaining agent at least 60 days prior to the redundancy exercise, whenever an employer is proposing to make 10 or more employees redundant.

The Government also wanted to remove the cap in the Employment Act which ensures that there is a 12-year limit on the redundancy pay an employee is entitled to under the law.

This came in the wake of Sandals making over 600 employees at the Cable Beach resort redundant so it could conduct renovati ons. The Government claimed that it was given very little notice of the resort’s plans to make the workers redundant.

Mr Woods told Tribune Business: “We also want industrial agreements to be incorporated into the individual contracts of employment for employees, so that when one expires the terms are incorporated in your individual contracts, which means that your benefits and so forth can continue.

“Even though we live under the spirit where, when one agreement expires that one remains in place until a new one is negotiated, we now want it to be enshrined in the law and not just common practice.”

Mr Woods added: “The other thing we would have looked at is the issue of dues and the deduction thereof.

The law presently now only speaks to the deduction of an agency fee.

“One of the recommendations we would have made is that once you gain recognition, the company is obliged deduct the union dues and/or the agency fee and forward that on. Those are some of the initial amendments that we talked about.”

These issues came to a head last summer when relations broke down between the Melia Nassau Beach Resort and the BHCAWU.

Govt told: Prioritise energy efficiency in all public properties

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A former Cabinet Minister yesterday said that while he backs the move to take government buildings off the energy grid, making these properties more energy efficient should be “priority number one”.

Phenton Neymour, who had ministerial responsibility for the then-Bahamas Electricity Corporation (BEC) under the former Ingraham administration, told Tribune Business: “To take the Government buildings off the grid is something I agree with. I am not of the view, however, that it will have any impact in the short-term.

“Yes, these buildings may feed excess power to BPL(Bahamas Power & Light) during the day, which I doubt, because government buildings are the most inefficient buildings that we have.

“We have done energy audits and have found that to be true. There is an ex-

Phenton Neymour cess of 30 per cent saving potential in government buildings. That was determined by the Fichtner study,” the former minister added.

“I’m of the view that the Government’s objective in energy should be more focused on making government buildings more energy efficient; first by beginning to turn off the lights at night, and secondly by putting in efficient air conditioning units.”

Kenred Dorsett, minis-

Chamber chief urges: ‘Stop finger pointing’ From pg B1 economic and fiscal prospects, and appears to have contributed to its decision to upgrade the Bahamas’ outlook from ‘negative’ to ‘stable’.

“We believe that the Bahamas’ strong institutions will continue to support political stability and economic policy implementation, as demonstrated by the successful introduction of the VAT last year,” S&P said.

“We expect broad continuity in government policies through the next elections, which are due by May 2017.”

Referring to “smooth transitions” between administrations, S&P added: “The stable outlook balances the Government’s recently worsened fiscal profile, increased debt burden and already elevated external risks with the benefits of the opening of Baha Mar, along with smaller tourism projects, that will sustain longterm economic growth.

“We also expect that the country’s strong institutions will support political stability through the 2017 elections and contribute to further efforts to limit the growth of the general government debt burden.”

S&P warned that another downgrade in the next two years would be sparked by “weakened political commitment” to fiscal consolidation, given the continued increase in the near-$7 billion national debt, and deterioration in the Bahamas’ growth prospects and other fiscal indicators.

“Conversely, we could raise the rating if the combination of better-than-ex-

ter of the environment and housing, said in a recent statement that government buildings will be taken off Bahamas Power and Light’s (BPL) electrical grid, starting next year.

Anatol Rodgers High School will be the ‘pilot project’ for a commercialscale solar facility, generating up to 300 kilowatts of electricity for the school.

“The Anatol Rodgers project will serve as a blueprint for how other public buildings, especially the more than 150 public schools throughout the Bahamas, can be systematically removed from the electrical grid,” Mr Dorsett said.

“It is also intended that the national stadium and swimming complex, the botanical gardens, the Lynden Pindling International Airport and the Office of the Prime Minister will shortly follow with photovoltaic retrofit as funding becomes available.”

Mr Neymour added: “They would have to review all of these facilities and put in a suitable system to be of

benefit. “ The other issue is that if they put in solar that is not a 24-hour service that would be provided to the building. In other words, BPL will still have to be providing services to them from the evenings to the midmornings. It is unfortunate because the higher demand is generally in the evenings for BPL, and so they will still be having issues.”

The former minister continued: “I disagree with the position that taking the buildings off the grid will not cause a significant reduction in revenue, because the Government is one of the largest customers of BPL. “Whether one believes it or not, the Government does provide a revenue source to BPL. The Government has bills it must pay. In return, BPL has taxes it must pay. I don’t think they are going to be providing any significant amount of money back to BPL because they don’t have the land space for sufficient panels to be placed.”

pected GDP growth and sustained fiscal consolidation reduces the sovereign’s debt burden, reduces the annual increase in general government debt, and contains external vulnerabilities,” the rating agency added.

S&P warned, though, that the Bahamas’ external risks were still “elevated”.

“The country’s external profile, including extremely high liquidity needs, growing external debt and large errors and omissions, continues to be a rating weakness,” it added.

“Based on the gross external liabilities of the country’s large banking sector, instead of netting out external assets, we expect the gross external financing needs of the public and financial sectors to reach 517 per cent of current account receipts (CAR)

in 2016, reflecting the stillhigh current account deficit as well as the high rollover needs of the financial sector.”

S&P said the Bahamas’ external liquidity needs were expected to drop over the next three years, although remaining above 300 per cent of CAR. “We expect the external debt of the public and financial sectors, net of usable reserves and financial-sector external assets, to rise to 54 per cent of CAR in 2016,” it added.

S&P said correspondent bank de-risking “could further pressure the financial system”, and said the Government was sent to inject further equity capital into troubled Bank of the Bahamas via a “convertible contingent bond” issue.

PAGE 4, Wednesday, December 21, 2016

Loretta: S&P move shows Govt breach of ‘fiduciary duty’ From pg B1 and balancing the Budget.

It’s more important than ever that caring Bahamians unite to get this government out.”

Mrs Butler-Turner said the latest S&P downgrade, following a trend that began under the former Ingraham administration, of which she was a member, reinforced the warnings provided by the International Monetary Fund (IMF) during its early December visit to Nassau.

The Fund, revealing that the 2015-2016 fiscal deficit was likely to come in at around $300 million, double the Government’s own projections, also urged the Christie administration to “rationalise” and better control its spending.

“We realise the Government was overly-optimistic and misleading in its projections, given where we are now,” Mrs Butler-Turner told Tribune Business.

“It seriously calls into question the fiduciary duties of the Government. It has to ensure the ship of state remains in a state of buoyancy, and the economy, with this bad news, is in a state of sinking.

“This bad news [the latest S&P downgrade] confirms all we’ve been harkening to.

It’s very, very sad. Bahamians are really going to have to double down, which they have been doing already, but Government must be more accountable and transparent.”

The Bahamas’ loss of investment grade creditworthiness has been several decades in the making, with successive administrations - including the present one - bearing a share of the responsibility for the persistent fiscal slippage, and seeming inability to reform and change course.

KP Turnquest, the FNM’s finance spokesman and deputy leader, told Tribune

Govt slams S&P for ignoring $1bn Baha Mar impact From pg B1 rating downgrades over the past two administrations.

Emphasising just how much it is counting on the Chinese to deliver, the Government said: “The Bahamas’ short- to mediumterm prospects for placing the economy on a stronger growth trajectory are more encouraging than they have been since the recent economic and financial crisis, and it is most unfortunate that S&P did not seem to fully consider the impact of the many growth generating initiatives underway.

“There is now no uncertainty regarding the restart and completion of the Baha Mar project which, alongside the other foreign investment-related projects underway, will help to ig-

nite growth, boost employment, improve business and consumer confidence and contribute to government revenue.”

The Government continued: “Definitive public statements have now been issued by the new owners of Baha Mar, Chow Tai Fook Enterprises’ (CTFE) Bahamian subsidiary, and almost 1,000 workers are currently on-site engaged in completion activities.

“With the first phase of Baha Mar’s opening, slated for April 2017, CTFE estimates that, starting next month, 1,500 jobs will be generated for Bahamians, and grow to 3,300 through August 2017.

“Building on the more than $100 million ex-gratia payments made to former

Business that the ‘junk/ speculative’ downgrade “doesn’t say much for our economy at all”.

“It’s rather sad for us, but I think it does reflect the state of where we are,” he said of S&P’s action, describing the rating agency’s move as “not surprising”.

“It’s all consistent with what we’ve been saying and what we know to be true,” Mr Turnquest added. “The reality is that the promised fiscal consolidation has not happened, and we’ve not only seen that in the recurrent deficit - which has doubled beyond what the Government predicted - but the expanding national debt and in the economy’s performance relative to GDP growth.

“The Government has been pinning its hopes on Baha Mar, which has been slow to take off. When the Prime Minister talks about 1,500 jobs in the 2017 first quarter, he’s being very hopeful, very optimistic, if what we have been led to believe about the state of the property is true.”

Mr Turnquest said he

was especially interested in S&P’s projection that the Bahamas would average -0.1 per cent GDP per capita growth over the next three years despite Baha Mar’s arrival, with this downbeat assessment following a decade of such contraction.

“We’ve had an average of 1 per cent growth over the last 10 years, 20 years, and for the last three years we’ve had negative GDP growth,” the FNM deputy leader added.

“I still contend that growth’s going to be flat-lining, if not negative, in 2016.

It doesn’t say much for our economy at all.”

S&P is estimating that the Bahamian economy will expand by a meagre 0.3 per cent of GDP in 2016, down from its earlier estimate of 1.2 per cent, but still arresting the negative growth trends.

The S&P forecast is now also more in line with the Government’s, which projected just 0.5 per cent in its May Budget, while the rating agency’s near-term predictions - 1 per cent for 2017, and a 1.3 per cent av-

erage for 2018-2019 - also match the Christie administration’s.

“The important thing they raise is that the fiscal consolidation is not being adhered to, or is not as aggressive as we’ve been led to believe,” Mr Turnquest told Tribune Business of S&P’s report.

“We’ve been unable to bring the recurrent deficit down significantly. As much as it has come down in recent years, it’s only been on the back of VAT, and recurrent expenditure has been increasing. It’s only a matter of time before that catches up. We’ve got this national debt that’s growing out of control, while they’re making claims of reducing the deficit.

“We know there’s a serious cash flow problem in the Government. We know they’ve been borrowing from NIB, the Central Bank, and know there are vendors providing services to the Government that have not been paid, or are being paid slowly.”

employees and creditors, this restart comes with additional capital investments approaching $1 billion that will have significant direct and indirect impacts on the economy.”

The Government’s statement does not state, though, how many of the 1,000 construction workers currently on-site at Baha Mar are Bahamian as opposed to Chinese nationals.

And S&P’s rationale for the ‘junk’ downgrade made clear that Baha Mar is arriving too late to rescue the Bahamas, pointing out that with the multi-billion dollar development’s ramp-up set to last for most of next year, its full economic impact is unlikely to be felt in 2017.

Elsewhere, the Government gave itself a ‘pat on the back’ for the “balanced and prudent” approach it is taking to fiscal reform.

In particular, it highlighted the newly-launched VAT, Business Licence, real property tax and Customs duty enforcement initiatives, which it hopes will generate between $40$80 million in additional taxes over the next six to 12 months.

“A strategic programme was recently launched to bring revenue administration processes, tools and techniques in line with international best practices to safeguard the revenue

base,” the Government added.

“On the expenditure side, measures have been taken to rationalise spending through initiatives such as the centralised procurement of goods and services and public private partnerships (PPPs).

The Government acknowledged that the damage created by Hurricanes Matthew and Joaquin had “placed additional strain on the Government’s resources and added to the debt stock”, but it expressed hope that improved economic growth would place its fiscal consolidation programme “back on track”.

“The Government is committed to achieving a fiscal balance compatible with an affordable level of debt, and one that eventually will support a rebuilding of fiscal buffers to deal with unforeseen circumstances,” the Christie administration said.

“The debt strategy, while focusing on containing the growth in the debt stock, also includes ensuring that state-owned enterprises are more accountable.”

The Government also hailed its Mortgage Relief Programme as helping to contribute to “a resumption in bank lending”, and touted the National Development Plan as the key to addressing the Bahamas’ long-term structural weaknesses and economic deficiencies.

“Reducing structural impediments to private sector growth, and enhancing the external competitiveness of the Bahamian economy,

remain key priorities of the Government,” the statement said.

“Through the soon-to-be released National Development Plan, the Government is determined to pursue, with urgency, sustainable economic reforms and responsible policy initiatives to further unlock the Bahamas’ growth potential - by way of continued investment in economic infrastructure, and reforms to improve the business environment and energy sector.”

While long on promises and commitments, the Government’s statement is light on detail, especially the ‘how to’ of implementation and execution to generate faster GDP growth and more Bahamian jobs.

Concluding its statement on an optimistic note, the Christie administration said: “The facts are compelling that the Bahamas remains an attractive jurisdiction for foreign investments/.

“It is the Government’s view that the Bahamas’ short-to medium term prospects are positive, and the immediate focus of policymakers is on ensuring that the many growth promoting initiatives underway take root and yield the expected dividends.

“As S&P monitors the impact of these various macroeconomic and fiscal measures and projects over the next six to 12 months, the Government is confident that the Bahamas will be able to secure an improved rating outcome.”

THE TRIBUNE

Control board outlines measures to fight Puerto Rico crisis SAN JUAN, Puerto Rico (AP) — A federal control board overseeing Puerto Rico’s finances gave the governor on Tuesday a list of proposed measures to turn around the U.S. territory’s economy including downsizing the government, privatizing ports and charging tourists more for certain services.

The board warned that Puerto Rico needs to take swift action because it faces a larger deficit than originally projected at $68 billion, in addition to nearly $70 billion in public debt the governor has said is unpayable and needs restructuring.

“Puerto Rico’s fiscal and economic problems are severe and could have dire consequences to its people and society if left unattended,” the board said.

Board members said the new projected deficit is $10 billion larger than the one included in a proposed fiscal plan that has become a point of contention between the board and Puerto Rico’s governor. The board last month rejected the plan submitted

by Gov. Alejandro Garcia Padilla, who has refused to revise the plan to include any austerity measures.

In a 10-page letter sent to Garcia, the board said Puerto Rico should privatize certain government assets, implement labor, energy and tax reforms, seek publicprivate partnerships and cut non-essential services, among other things.

The board said it will identify those non-essential services in upcoming weeks, as well as point out ways to consolidate public agencies.

“Every month we wait represents lost opportunity for economic growth and Puerto Rico’s ability to recover,” said the board, which was created after U.S. President Barack Obama signed a rescue package for Puerto Rico in late June.

It stressed that Puerto Rico also needs to cut its education and health-care budgets, and said that furloughs and freezes across government agencies may be implemented.

The board also suggested charging tourists higher prices for services such as ferry transportation to the popular islands of Vieques and Culebra.

Garcia did not comment specifically on the proposed measures, but said the revised projected deficit only serves to highlight the need to restructure the island’s debt.

THE TRIBUNE

Wednesday, December 21, 2016, PAGE 5

Euro slips further toward one-to-one with dollar

FRANKFURT, Germany (AP) — The dollar’s upward march has sent the euro currency to its lowest level in 14 years, easing the financial pressure on traveling Americans but giving European exporters a boost.

The euro, used by 19 countries, was down 0.1 percent at $1.0390 lateafternoon Tuesday, having earlier fallen to $1.0352,

its lowest level since early 2003.

Over recent days, the euro’s descent to the psychologically important level of one euro per dollar, has accelerated.

A major factor has been the prospect of more interest rate hikes by the U.S. Federal Reserve following a quarter-point increase in its benchmark rate last week.

Higher interest rates in the

Business confidence ‘appalling’, says ex-Tax Coalition chief From pg B1 institutions and investors are going to demand a premium for that debt. Our debt will cost us considerably more, so we will be spending more money on interest payments (debt servicing costs) than we were.

“That’s the problem; as soon as that starts kicking in, that number is going to go up.”

The S&P action thus threatens to trigger an increase in the annual Budget sums that the Government must allocate to pay interest and principal redemptions on its debt - something that is already costing taxpayers more than $500 million per year.

The added debt servicing costs would suck money away from areas such as national security (Police and Defence Force), social security, education and health, impacting the quality of life for the ‘average’ Bahamian.

Mr Myers, now a principal with the Organisation for Responsible Governance (ORG), said he had been concerned about the Bahamas’ deepening fiscal and economic plight ever since he headed the CRT. “When we had the last downgrade, you and I had this conversation, and I said that I’m very concerned we’re not correcting or, more importantly, doing anything to correct the negative trends,” he said.

“I was even more concerned then that we’re not hearing anything from the Government on the measures they’re taking. We can’t keep talking about these growth initiatives and they don’t materialise.

“GDP, ease of doing business, they’re not heading in the right direction, and if you ask me as a businessmen, there’s more and more bureaucracy taking place with things like the Business Licence and other activities to the point where they cannot say business confidence is improving,” Mr Myers continued.

“It’s not improving. If you did a poll of Bahamian businesses - they aren’t very good at responding to polls - but from the discussions I’ve had with numerous businessmen, business confidence is appalling and consumer confidence is not much better.”

The S&P downgrade to ‘junk’ status is likely to further exacerbate the uncertainty gripping many Bahamian businesses as the country heads into the pregeneral election build-up - a time when locally-owned companies traditionally hold back on growth and investment projects.

Mr Myers, meanwhile, said the Government had yet to take action, or see reforms bear fruit, in areas such as energy reliability and costs; public sector management; and the prom-

U.S. increase returns on dollar investments and spur demand for the currency.

European monetary authorities — meaning the European Central Bank in Frankfurt — have widened the rate gap further by extending stimulus efforts aimed at pushing market rates down. The ECB’s benchmark remains at a record low of zero compared with the Fed’s range of 0.5-

ised publication of a ‘White Paper’ on a Fiscal Responsibility Act. “The National Development Plan (NDP) people have picked up on a lot of these things that we’ve said for years,” he told Tribune Business.

“But what the NDP doesn’t do is give us the means to get there; execution, implementation, human capital. Whose going to do this?”

Mr Myers said agencies such as Customs and the Real Property Tax Department, which were both collecting less than 50 per cent of due revenues, were major problems that are also required to be part of the solution.

“We have these significant problems and are not resolving them,” he told Tribune Business. “We have got to create accountability, and separate management from the politicians. We can’t have MPs telling the Ministry of Works who to hire.

“These things are important. It’s how you get your fiscal house in order. It’s not just cutting back on pencils and staplers. There’s got to be zero-sum budgeting, and we have to start using bigger measures to create real change - amending General Orders, and getting the Government more transparent, accountable and efficient. Nothing’s been done on that. Nothing’s been written on that.”

0.75 percent.

Fawad Razaqzada, market analyst at Forex.com, said that the disparity between U.S. and European central bank policies was the "driving force" behind the euro’s slide toward socalled parity.

He said the exchange rate could reach parity "possibly before the year is out." The two currencies were last equal in value in 2002.

Parity has little economic meaning by itself, but it is eye-catching and underscores the euro’s long slide from recent peaks. The currency has dropped from around $1.40 as recently as May, 2014.

To put it in pocketbook terms, the 17-euro lift ticket to the top of the Eiffel Tower in Paris costs $17.62 in dollar terms at today’s rate, compared to around $23.80

back then.

Yet European authorities are unlikely to complain. A lower euro gives their exporters a boost by making their goods cheaper in dollar terms. And while a lower euro also increases the price of energy — often priced in dollars — that isn’t all bad either. The ECB is trying to boost inflation that it considers too low for a healthy economy.

PAGE 6, Wednesday, December 21, 2016

Bahamas receives ‘junk’ Xmas present from S&P From pg B1 and fiscal consolidation plans, which were already progressing more slowly than expected.

Echoing the International Monetary Fund’s (IMF) recent warnings, S&P said government spending was still outpacing revenues despite Value-Added Tax’s (VAT) introduction, with Hurricane Matthew restoration costs set to inflict “further pressure” on expenditure in 2017.

“We expect Bahamian GDP to grow by only 0.3 per cent in 2016, on the back of a 1.7 per cent contraction in 2015, and grow 1.2 per cent on average over the next three years,” S&P

said.

“At the same time, we believe that this lower growth trend will challenge the government’s ability to meet its fiscal projections, likely resulting in rising debt.

“The erosion of the Bahamas’ creditworthiness reflects these growing vulnerabilities within a context of a weak external position with growing levels of external debt, double-digit unemployment, high nonperforming loans in the banking system, and high household indebtedness.”

S&P added that Baha Mar was unable to come to the Bahamas’ rescue in time to avoid a downgrade, effectively dismissing the

$3.5 billion development’s economic impact for much of 2017.

“The country’s largest tourism project, Baha Mar, is set to open in phases beginning in 2017. We believe that it will take time before the resort is able to operate at full capacity,” the rating agency added.

Painting a grim picture of the Bahamas’ near-term economic and fiscal prospects, S&P said the Bahamas’ real GDP per capita growth was still likely to average -0.1 per cent over the next three years.

This followed a similar “negative average” over the previous decade, with S&P also projecting that the Government’s projected 1.3 per cent primary fiscal surplus for the 2015-2016 Budget year will instead be a 0.3 per cent deficit.

Describing the Bahamas as having a “record of poor economic growth”, S&P said: “Lower-than-anticipated growth, in addition to spending pressure following damage inflicted by the hurricane, will slow the pace of fiscal consolidation beyond our prior expectations for 2016 and 2017.

“While the Government had previously anticipated a primary fiscal surplus in 2015-2016 of 1.3 per cent of GDP, our own expectation was a 0.3 per cent primary surplus. However, we now expect a primary deficit of 0.3 per cent of GDP.” The primary budget measures the difference between government revenues and recurrent expenditure (excluding interest payments on its debts).

S&P said that despite VAT boosting government revenues to the equivalent of 25 per cent of GDP in the 2015-2016 fiscal year, the benefits were being squandered by a rise in government spending to 29 per cent of GDP for that same period.

And, in stark contrast to the Government’s forecast, which projects a GFS fiscal surplus and shrinking national debt by the 2018-2019 fiscal year, S&P anticipates that these indicators will still be in deficit and rising, respectively.

“The Government’s fiscal consolidation efforts have largely focused on revenues - primarily through the successful introduction of the VAT in 2015, which helped boost general government revenues to an expected 25 per cent of GDP in the fiscal year ended in June 2016 from 20 per cent two years earlier,” S&P said.

“However, spending has continued to rise, and we expect general government expenditures to reach around 29 per cent of GDP in the fiscal year ended in June 2016, from 25 per cent in the 2013-2014 fiscal year.

“During the current fiscal year, ending in June 2017, we believe that there will be further pressure on spending,” the rating agency continued.

“Estimates place total damages inflicted by Hurricane Matthew above $600 million, or nearly 7 per cent of GDP, though this includes an estimated $400 million in insured losses to private property.

“Hurricane-related spending could further slow the pace of fiscal consolidation. We now expect the change in general government debt to GDP to reach 3.5 per cent in 2016 and 3.7 per cent in 2017, and then fall gradually thereafter, reaching 2.3 per cent by 2019.”

This means, though, that the national debt as a percentage of GDP will still be steadily increasing, with the direct charge hitting 63.2 per cent in 2019.

“Continued fiscal deficits will likely boost net general government debt toward 57 per cent of GDP in 2016, from 53 per cent in 2015, and reach 60 per cent by 2018,” S&P said.

“Additionally, once we include the debt of public sector enterprises, we expect gross debt to rise to 76 per cent of GDP in 2016.

We also forecast general government interest payments to represent 12 per cent of general government revenues on average through 2019.”

Michael Halkitis, minister of state for finance, could not be contacted for comment last night.

MARKET REPORT TUESDAY, 20 DECEMBER 2016

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 1,933.92 | CHG 0.42 | %CHG 0.02 | YTD 109.97 | YTD% 6.03 BISX LISTED & TRADED SECURITIES 52WK HI 4.25 17.43 9.09 3.55 4.70 0.12 8.22 8.50 6.10 10.60 15.50 2.72 1.60 5.82 9.30 11.00 9.00 6.90 12.25 11.00

52WK LOW 2.50 17.43 8.19 3.50 1.77 0.12 5.50 8.05 5.50 7.67 12.59 2.18 1.31 5.60 6.70 8.56 6.12 6.35 11.81 10.00

1000.00 1000.00 1000.00 1000.00

900.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 106.00 100.00 106.00 105.00 105.00 100.00 10.00 1.01

1.00 105.50 100.00 100.00 105.00 100.00 100.00 10.00 1.01

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Famguard Fidelity Bank Finco Focol ICD Utilities J. S. Johnson Premier Real Estate Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00 100.00

52WK LOW 100.00 100.00 100.00

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS FAM FBB FIN FCL ICD JSJ PRE CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 17 (Series A) + Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +

SYMBOL FBB17 FBB18 FBB22

Bahamas Note 6.95 (2029) BGS: 2014-12-3Y BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0103 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

113.70 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS 52WK HI 2.01 3.91 1.93 169.70 140.34 1.45 1.67 1.56 1.09 6.94 8.65 5.92 9.94 11.15 10.46

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.40 1.61 1.50 1.03 6.41 7.62 5.66 8.65 10.54 9.57

LAST CLOSE 4.06 15.85 9.09 3.52 1.77 0.12 5.60 8.50 5.83 10.39 13.23 2.16 1.60 5.82 9.30 10.95 8.74 6.75 11.93 10.00 1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.01 LAST SALE 100.00 100.00 100.00 108.83 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

CLOSE 4.06 15.85 9.09 3.52 1.77 0.12 5.60 8.50 5.83 10.40 13.23 2.15 1.60 5.82 9.30 10.95 8.74 6.75 11.93 10.00

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 -0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.11 100.00 100.00 100.00 10.00 1.01

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00 100.00 100.00

CHANGE 0.00 0.00 0.00

108.84 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund

VOLUME 115 40 400 5,000

500

VOLUME

NAV 2.01 3.90 1.93 169.70 140.34 1.45 1.67 1.56 1.09 6.94 8.65 5.92 9.59 11.15 9.57

EPS$ 0.304 1.351 1.086 0.220 -1.134 0.000 0.185 0.551 0.508 0.541 0.528 0.094 0.166 0.510 0.612 0.960 0.650 0.703 0.756 0.000

DIV$ 0.090 1.000 0.000 0.160 0.000 0.000 0.187 0.260 0.200 0.360 0.610 0.060 0.040 0.240 0.275 0.000 0.280 0.120 0.640 0.000

P/E 13.4 11.7 8.4 16.0 N/M N/M 30.3 15.4 11.5 19.2 25.1 22.9 9.6 11.4 15.2 11.4 13.4 9.6 15.8 0.0

YIELD 2.22% 6.31% 0.00% 4.55% 0.00% 0.00% 3.34% 3.06% 3.43% 3.46% 4.61% 2.79% 2.50% 4.12% 2.96% 0.00% 3.20% 1.78% 5.36% 0.00%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST 7.00% 6.00% Prime + 1.75%

MATURITY 19-Oct-2017 31-May-2018 19-Oct-2022

6.95% 4.00% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

20-Nov-2029 15-Dec-2017 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022

YTD% 12 MTH% 3.11% 4.17% 3.28% 4.34% 2.07% 2.93% 4.73% 5.64% 5.70% 7.66% 2.86% 3.86% 2.64% 3.93% 2.51% 3.63% 5.44% 4.48% 4.05% 8.28% 5.93% 13.53% 2.73% 4.73% 3.97% -3.53% 2.96% 4.33% -4.26% -6.22%

NAV Date 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 30-Sep-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

However, in a statement the Government last night slammed S&P’s latest downgrade, saying it did not “fully consider” initiatives that were already underway to generate greater economic growth (see other article on Page 1B).

Its statement, though, did not identify any specific initiatives by name other than Baha Mar, indicating that all the Government’s growth and job creation hopes are pinned on the Chinese government and the project’s new owner, Chow Tai Fook Enterprises (CTFE).

The only bit of ‘good news’ for the Government was S&P’s decision to place a ‘stable’ outlook on the Bahamas and its credit rating, with the agency implying that - barring major negative shocks to the economy - no further downgrades are likely over the next two years.

And Moody’s, the other rating agency, is still keeping the Bahamas at ‘investment grade’, taking a more relaxed view on Baha Mar and the Christie administration’s fiscal consolidation efforts.

Private sector and political reaction to S&P’s unwanted ‘Christmas gift’ was swift, all interpreting it as a strong signal that the Bahamas rapidly needs to alter its fiscal and economic course.

Loretta Butler-Turner, the Opposition’s leader in the House of Assembly, responded: “Oh my God, this is not a good Christmas.

“This is striking at the heart of our country, the same way it hit me in my heart. We’ve obviously gone over that precipice that I’ve been talking about for some time.

“Unfortunately, for Bahamians it’s going to be even more difficult for us as a country to remain competitive in the financial field.

The fact we have lost investment grade status is going to cost us in the future.”

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, told Tribune Business: “It has to be

THE TRIBUNE seen as a real wake up call.

It’s not good news for anybody.”

Mr Sumner agreed that S&P’s action was not unexpected, but said he and the Chamber had hoped “previous discussions” with the rating agencies (including Moody’s) and “things in the pipeline” would have prevented the ‘junk’ downgrade.

The Chamber chief executive acknowledged, though, that this was now akin to “looking through the rear view mirror”.

The loss of ‘investment grade’ status is potentially highly damaging for the Bahamas and its economy, as it signals to the international capital markets that this nation’s creditworthiness is slipping into dangerous territory.

The Government will likely have to pay more for current and future debt issues, raising its debt servicing (interest) costs, and sucking money away from essential public and security services The ‘junk’ downgrade may also deter investors assessing the Bahamas as a place to invest, as it raises questions about the Government’s economic management.

“That has knock-on effect on the cost of capital across the board,” Kenwood Kerr, chief executive of Providence Advisors, told Tribune Business last night.

“The lowering of the credit rating causes [interest] rates to rise, especially for external borrowing. To the extent that’s used to support business growth and expansion, that’s going to be more expensive.

“It just raises the uncertainty, and with oil prices rising, it’s going to have a knock-on effect for us. It [S&P’s action] was not unexpected, but is not welcome. We need to address the underlying deficiencies in the economy and mobilise capital much more quickly.”

THE TRIBUNE

Wednesday, December 21, 2016, PAGE 7

Banks and travel stocks rise as Dow inches close to 20,000 NEW YORK (AP) — Big gains for banks and companies focused on travel helped propel U.S. stock indexes to record levels on Tuesday. The Dow Jones industrial average moved closer than ever to 20,000, but the symbolic threshold remained just out of reach.

Banks once again led the way Tuesday as bond yields and interest rates bounced higher. Strong earnings from cruise line operator Carnival and gains for travel website TripAdvisor led consumer companies higher. Household goods makers fell after Cheerios maker General Mills cut its sales projections for the year, and energy companies fell for the second day in a row. That hadn’t happened three weeks. The Dow came within 13 points of the 20,000 mark around 10 a.m.

Trading remained light as the Christmas holiday approached.

Stocks have soared since the presidential election and the Dow has risen almost 1,000 points in under a month, and some investors think that means stocks won’t move much in 2017.

“We’re at fair value,” said Scott Wren, a senior global equity strategist at the Wells Fargo Investment Institute.

“This is not going to be a big return year for the stock market.”

The Dow gained 91.56 points, or 0.4 percent, to a record close at 19,974.62.

The Standard & Poor’s 500 index picked up 8.23 points, or 0.4 percent, to 2,270.76.

The Nasdaq composite also finished at a record as it added 26.50 points, or 0.5 percent, to 5,483.94. The Russell 2000 index of smallcompany stocks jumped 12.27 points, or 0.9 percent, to 1,383.96.

Bond prices reversed course and fell after climbing higher Monday. The yield on the 10-year Treasury note rose to 2.56 percent from 2.54 percent. Bond yields have risen sharply of late, and that’s good for banks because higher bond yields are linked to higher interest rates, which let them make more money from lending. Regions Financial rose 30 cents, or 2.1 percent, to $14.58 and Citigroup gained $1.14, or 1.9 percent, to $60.80.

Cruise line operator Carnival reported profit and sales that were stronger than expected. The company said bookings for trips in 2017 are stronger than they were at this time last year.

It said both ticket sales and prices are up. Carnival stock rose $1.17, or 2.3 percent, to $52.49 and competitor Royal Caribbean gained $2.85, or 3.4 percent, to $85.40.

Travel website operator TripAdvisor jumped $2.34, or 5 percent, to $48.79 after it said it will start adding some Expedia brands to its instant hotel booking platform.

Cheerios and Pillsbury roll maker General Mills cut its sales outlook for the year. The Minnesota company and many of its competitors have struggled as more Americans stay away from processed foods.

Its stock lost $1.61, or 2.6 percent, to $61.45. Other household goods makers like Tyson Foods and Kraft Heinz also traded lower.

Beer and wine maker Con-

stellation Brands slid $6.32, or 4 percent, to $150.45 after it completed the sale of its Canadian wine business.

Retailer Fred’s soared after it agreed to buy 865 Rite Aid pharmacies for $950 million. That’s a huge expansion for Fred’s, which had 648 total stores at the end of October. Only about half of them had pharmacies. Its stock surged $9.04, or 81.1 percent, to $20.19.

The sale may also clear the way for Walgreens Boots Alliance, the largest U.S. drugstore operator, to buy Rite Aid. That $9.4 billion deal was announced more than a year ago. Rite Aid climbed 44 cents, or 5.4 percent, to $8.61 and Walgreens picked up 22 cents to $86.28. If the two sales close, Fred’s will become the third-largest drugstore chain in the U.S.

Gaining Ground Other consumer companies also gained ground.

Used car dealership Carmax jumped $3.80, or 6.1 percent, to $66.16 after a strong earnings report.

Consumer-focused companies have outperformed the market since the November election as investors expect them to benefit from a possible pickup in economic growth. But the sector has lagged the market in 2016 after a large gain a year ago.

www.ub.edu.bs

NOTICE

FACULTY VACANCIES Suitably qualified candidates are invited to apply for the following positions at University of The Bahamas: A stock trader follows stock information on electronic screens at the New York Stock Exchange, yesterday, in New York. Gains for banks and travel companies are pulling U.S. stock indexes to record levels on Tuesday. Financial firms are rising thanks to a recovery in bond yields and interest rates. The Dow Jones industrial average is closer than ever to the 20,000 mark. Industrial companies continue to build on their recent gains. (AP Photo)

Senior Management • Dean, Continuing Education and Lifelong Learning • Dean, Faculty of Liberal and Fine Arts • Dean, Faculty of Business, Hospitality and Tourism Studies • Dean, Faculty, Northern Bahamas Campus • Associate Vice President, Northern Bahamas Campus Management • Executive Director, Culinary Arts and Tourism Studies Middle Management • Grants Coordinator Staff • Grants Writer Faculty • Faculty of Business, Hospitality & Tourism Studies o Assistant Professor, Accounting (full-time) o Assistant Professor, Management/Marketing (full-time) • Faculty of Communication and Creative Arts o Assistant Professor, Spanish (full-time) o Assistant Professor, French (full-time) o Assistant Professor, French and Haitian Creole (full-time) o Associate Professor, Choral Conducting/Piano (full-time) o Media Lab Technician (full-time) o Part-Time Lecturer, Art (Ceramic Art) o Part-Time Art Studio Technician • Faculty of Pure and Applied Sciences o Associate Professor, Agriculture (full-time) o Assistant/Associate Professor Architecture (full-time) o Assistant/Associate Professor, Biology (full-time) o Assistant /Associate Professor Chemistry o Assistant/Associate Professor Electrical Engineering/Engineering Technology (full-time) o Assistant/Associate Professor, Physics o Assistant/Associate Professor Applied Mathematics (full-time) • Faculty of Social and Educational Studies o Assistant Professor, History (full-time) o Assistant Professor, Law (full-time) o Assistant Professor, Law and Criminal Justice (full-time) o Assistant Professor, Psychology (full-time) o Assistant Professor, Sociology (full-time) o Assistant/Associate Professor, Education (full-time) o Assistant/Associate Professor, Mathematics Education – Elementary (full-time) o Assistant/Associate Professor, Mathematics Education – Secondary (full-time) o Assistant/ Associate Professor, Special Education (full-time) • Faculty of Liberal and Fine Arts o Assistant Professor, Rhetoric and Composition (full-time) o Assistant Professor, Rhetoric and Composition and Caribbean Studies (full-time) o Assistant Coordinator, Language Resource Centre (full-time) • University Libraries o Law Librarian (full-time) o Campus Librarian, Librarian II – Northern Bahamas Campus (full-time) For more information visit http://www.ub.edu.bs/about-us/career-opportunities/ Materials should be submitted electronically, attention Office of Academic Affairs, University of The Bahamas via e-mail at facultyapply@ub.edu.bs by March 6, 2017. Send all documents together, including: 1) cover letter describing academic philosophy and vision, research and publications; 2) curriculum vitae; 3) sample course syllabus; 4) official copy of all academic records; 5) representative sample of research, publication or creative work; 6) at least one letter of recommendation; and 7) a UB application form.

Note the position in the subject field of the email. Hard copy submissions will not be accepted. Incomplete files will not be considered.