CariCris: Guardian Holdings' credit rating high

Caribbean Information and Credit Rating Services Ltd (CariCris) has maintained its ratings for Guardian Holdings Ltd (GHL) as having high creditworthiness on a Jca$13.4 billion bond issue, part of which was used to acquire NCB Insurance Company.

In a media release, CariCris reaffirmed the ratings of CariAA for foreign and local currency ratings on the regional scale and jmAA for local currency ratings on the Jamaican national scale.

The regional scale rating, CariCris said, indicates that its creditworthiness to the bond issue in relation to other debt obligations in the Caribbean is high.

CariCris gave a stable outlook on the company’s ratings, based on the expectation on continued good financial performance over the next 15 months.

“This is expected to be driven by the solid performance of GHL's operating subsidiaries, which is expected to enable the company to comfortably meet its obligations as they become due,” CariCris said.

It added that GHL’s current exposure to downside risks also tempers the ratings.

In September 2020, GHL issued the bond with plans to use proceeds to acquire the insurance portfolios and business of NCB Financial (NCBFG).

In the GHL’s consolidated financial statements for the year ending December 31, 2020, it described the bond as being comprised of five series where interest is payable quarterly and the principal is payable at maturity.

The bond issue was opened for a week, from September 21-25, according to reports.

An unsecured bond is a facility usually issued by corporations, municipalities and governments, where the issuer agrees to pay back the principal amount, along with periodic payments, until maturity.

These bonds do not have collateral attached to them, which means that businesses and governments can borrow capital based on its credit rating.

While investing in this type of bond is usually risky because repayment relies solely on the bond issuer’s financial stability, it usually comes with higher interest rates and the potential for higher returns.