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Moody's Investors Service Inc.

Moody's Affirms Caribbean Development Bank's Aa1 Ratings, Maintains Stable Outlook

Strategic Insights

— 1 min read

The Caribbean Development Bank's (CDB) strong capital and liquidity metrics, prudent risk management, and robust shareholder support have led to the affirmation of its Aa1 long-term issuer and foreign-currency senior unsecured bond ratings by Moody's Investors Service. The stable outlook reflects the bank's ongoing efforts to improve its asset quality and reduce portfolio concentration through balance sheet optimization. Moody's expects these efforts to lead to a more diversified portfolio and reduced concentration and credit risk on the CDB's balance sheet.

Key Takeaways:

  • The CDB's credit profile is underpinned by strong capital and liquidity metrics, with leverage standing at 1.6x at the end of 2024 compared to 1.4x in 2021.
  • The bank has taken important steps to reduce portfolio concentration, including a $450 million Exposure Exchange Agreement (EEA) with CABEI and a potential $200 million Portfolio Credit Guarantee with the Government of Canada.
  • The CDB's liquidity position is strong, with a diversified funding base and auxiliary access to liquidity facilities from large commercial banks and other Multilateral Development Banks (MDBs).
  • The bank benefits from solid shareholder support, with countries like Canada and the UK demonstrating their support through the CDB during times of stress.
  • The stable outlook captures the relatively weak credit quality of the CDB's borrowing members, balanced against the bank's efforts to reduce portfolio concentration and diversify its credit exposure.

Statistics:

  • Leverage: 1.6x at the end of 2024, compared to 1.4x in 2021.
  • Single-name exposure: expected to decline to 9% in 2025 from 17% in 2024.
  • Top 10 exposures: expected to decrease to 68% in 2025 from 87% in 2024.
  • Liquidity position: exceeded 400% of net outflows in 2024, up from 200% in 2022.
  • Diversified funding base: includes access to liquidity facilities from large commercial banks and other MDBs.
  • Portfolio credit guarantee: CDB is negotiating a $200 million guarantee with the Government of Canada.

Sources:

  • Moody's Investors Service, "Moody's Rates Caribbean Development Bank (Aa1 stable)", March 2025.
  • The Caribbean Development Bank, "Annual Report 2024".
  • Multilateral Development Banks and Other Supranational Entities methodology, published in February 2024.

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