Fitch Downgrades Dominican Republic's Ratings to 'CCC+'; Rating Watch Negative.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 30, 2004

Fitch Ratings, the international rating agency, today downgraded the ratings on the Dominican Republic's foreign currency obligations to 'CCC+' from 'B'. The ratings remain on Rating Watch Negative.

The action partly reflects the government's inability to make a US$27 million payment on the scheduled Jan. 23 coupon date. Although the government maintains that it was not able to make the payment due to technical reasons, Fitch is concerned that this situation could potentially be a reflection of underlying financial stress of the sovereign. The government intends on paying the coupon before the grace period expires in 30 days.

In addition, given the Dominican Republic's fragile liquidity position, Fitch is also concerned about the implementation risk of the government's Stand-by program with the IMF due to pre-electoral politics and the possible implications this could have for multilateral disbursements. Divisions within the ruling Partido Revolucionario Dominicano (PRD) party over who should be their presidential candidate have complicated the political environment. With US$504 million in public sector medium and long-term debt amortizations due this year (versus an estimated US$260 million in reserves), the Dominican Republic can ill afford to lose multilateral financing.