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Outlook On Cook Islands 'BB-' Rating Revised To Positive As Gross Debt Is Halved

March 15, 2006 | Cbonds

Standard & Poor's Ratings
Services today revised the outlook on its 'BB-' credit ratings on the Cook
Islands to positive from stable after the government reached an agreement to
retire its debt to the Italian export credit agency SACE SpA.
In June 2006, the Cook Islands will pay SACE about NZ$13.5 million in
cash in settlement of the Italian export credit agency's loan of NZ$51 million
face value. This repayment will reduce the Cook Islands' gross debt by 50% to
NZ$48 million.
"The government has used its carefully accumulated cash balances
prudently, reducing debt considerably and improving financial flexibility,"
said credit analyst Sharad Jain, Sovereign & International Public Finance
Ratings. "However, the government is now expected to take on new debt as part
of its Infrastructure Development Plan that will be released in several months
time. Once the details of this plan are clear, Standard & Poor's will be
better positioned to evaluate the lasting impact of the Cook Islands' recent
liability management operations," he added.
Another key issue that should become clear over the next few months is
that of import duties. In fiscal 2007, these duties are scheduled to be
removed, cutting about 10% from the government's revenue base. The schedule
for implementing these cuts is expected to be announced in the June budget.
"Although trade liberalization measures are welcome, compensating
revenues will be needed in order not to weaken public finances," said Mr. Jain

Company: Cook Islands

Full company nameCook Islands
Country of riskCook Islands
Country of registrationCook Islands


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