Introduction to CariCRIS

1. Introduction toCariCRIS Caribbean Information & Credit Rating Services Limited

2. Presentation Structure • Why CariCRIS • CariCRIS Rating Scheme • CariCRIS Rating Methodologies • CariCRIS Rating Process • CariCRIS Governance Structure

3. Why CariCRIS • Caribbean • Small sized economies limiting local bond market development • Credit research in public domain relatively scarce • Sizeable regional economy  • Increasing evidence of cross border financing  • Conducive business & regulatory environment  • The Caribbean needs an integrated, regional debt market • A regional credit rating services company is an essential ingredient

4. Role of Rating Agencies • Rating agencies have provided opinions on creditworthiness of bond issuers for over 100 years. • Provision of such credit information lubricates the working of bond markets. • Impact of credit ratings on securities markets include: • Issuer’s cost of capital • Issuer's access to capital • Structure of financial transactions • Ability of fiduciaries and others to invest in particular investments • Increased transparency and market pressure toward improved corporate governance on the part of issuers

5. Credit Rating- some fundamentals • A credit rating is a current opinion on the relative creditworthiness of debt • Ratings are: • Always relative • Within a defined frame of reference • Ratings Frames of Reference can be: • Global • National • Regional

6. CariCRIS–Rating Products • Regional Scale Ratings • Opinion on creditworthiness relative to other entities in a defined Caribbean region • Foreign currency ratings • Local currency ratings • National Scale Ratings • Opinion on creditworthiness relative to other entities within a specific nation • Local currency ratings

7. ABC (T&T) Ltd XYZ (J’ca) Ltd Regional ScaleForeign Currency US$ US$ ABC (T&T) Ltd XYZ (J’ca) Ltd Regional ScaleLocal Currency TT$ J$ ABC (T&T) Ltd PQR (T&T) Ltd National ScaleLocal Currency TT$ TT$ Illustration You want to compare … Use …

8. CariCRIS Rating Scale

9. What is a credit rating ? What a rating is: • A current opinion on the relative creditworthiness of debt • An issue specific evaluation • Aimed at differentiating credit quality • A response to the market’s demand for information What a rating is not: • Not an audit of the issuing company • Not a one time assessment of creditworthiness of the issuer • Not a general purpose certification of goodness of a company • Not a recommendation to buy, hold or sell the rated security

10. Debt/Notional debt issued by: Sovereigns Manufacturing/ Service companies Statutory Bodies/Public Sector Companies Financial institutions & Banks Finance Companies Credit Unions Holding Companies Insurance Companies Mutual Funds Such as: Bonds Bank Deposits Commercial Paper Term Loans Preference shares Secured debt Unsecured debt Mortgage backed securities Asset backed securities Structured obligations What can be rated? CariCRIS will primarily assign issue specific ratings.

11. Benefits of a CariCRIS rating Investors • Eases risk identification and diversification • Risk based pricing of Investments • Greater depth of research, being locally based Issuers • A proactive step towards transparency • An independent, unbiased assessment • Enhances credibility & acceptability • Increases access to funding • Encourages financial discipline Regulatory authorities • Investor protection • Market discipline Intermediaries • Fixing coupon rates • A second opinion

12. CariCRIS Rating Process Rating Agency Borrower/ Issuer Assigns analytical team, conducts preliminary research Requests for a Rating Collection of information from company Document Preparation Management Meetings Rating Committee assigns rating Communication/Discussion of rating with issuers by Rating Team Acceptance & Dissemination of rating/ publication Surveillance & Annual Review

13. Governance Structure Shareholders Board of Directors Rating Committee Management CODE OF CONDUCT & BEST PRACTICES OPERATIONS AUDIT & PROCESS QUALITY CONTROL TRANSPARENCY OF CRITERIA

14. Participation By All Key Market Players CentralBanks • Central Bank of T&T • Central Bank of Barbados • Eastern Caribbean Central Bank Commercial Banks • Capital & Credit Merchant Bank • Citibank T&T • First Caribbean International Bank • First Citizens Bank • Inter Commercial Bank • NCB Jamaica • RBTT Bank • Republic Bank • Scotiabank, T&T Mutual Funds/Unit Trust • Fortress Fund, Barbados • Unit Trust Corporation, T&T • Insurance/Conglomerates • CL Financial • Guardian Holdings Limited • National Insurance Board, T&T • New India Assurance • Sagicor Life Inc • Multilateral Agencies • Caribbean Development Bank • Inter-American Development Bank* • Brokerage Houses • CMMB • JMMB • Stock exchange • T&T Stock Exchange • Technical Consultant • CRISIL • * Formalities in process

17. Technical Assistance from CRISIL • Fourth largest rating agency in the world with 17 years in market leadership position • Strong relationship with Standard & Poor’s (S&P) • Approx. US$ 100 billion of debt rated so far • Helped set-up rating agencies in Israeli and Malaysia

18. Our Values & Processes • Core Values • Integrity • Independence • Analytical rigour • Team work • Processes • Interactive rating process • Team & Committee approach • Local knowledge combined with global best practices • Strict confidentiality in handling client information

19. A Catalyst A rating agency’s role in a developing economy is much wider than in a developed one CariCRIS intends to play an important role in strengthening debt markets in the Caribbean Providing independent and credible benchmarking and valuation tools through credit ratings and risk management tools Engaging in policy level work with local governments, multilateral agencies, central banks, SEC, etc. in areas like infrastructure policy formulation, financial sector regulation • Imparting credit risk and risk management training to the various constituents in the market place

20. THANK YOU Caribbean Information & Credit Rating Services Limited info@caricris.com / www.caricris.com Tel: (868) 627-8879 Fax: (868) 625-8871