Moody's Investors Service on Friday adjusted its outlook for Trinidad & Tobago to stable from negative and affirmed the country's Ba2 long-term local and foreign currency issuer and senior unsecured ratings. The rating action reflects what Moody's describes as improved near-term external prospects stemming from stronger projected oil and gas prices alongside a more manageable external repayment profile after a recent eurobond transaction.
The ratings agency said higher forecast prices for oil and natural gas should increase export receipts, supporting the practical peg of the Trinidad & Tobago dollar to the US dollar and easing pressure on foreign-exchange reserves. Moody's projects that foreign-exchange reserves will remain in the range of $3.5 billion to $4 billion, a level it judges adequate to cover external debt-service and imports despite persistent structural balance of payments pressures that the agency expects to continue until new gas projects begin production toward the end of 2027.
Moody's highlighted a January 2026 government issuance of a $1 billion eurobond as contributing to a smoother external repayment schedule. The eurobond proceeds were used in part to redeem nearly $600 million of the bond maturing in August 2026, reducing near-term redemption risk and smoothing the external maturity profile, according to the agency.
In affirming the Ba2 ratings, Moody's balanced the country's long-term structural constraints as a mature hydrocarbon producer against a set of credit-supportive buffers and institutions. The agency noted that a secular decline in energy output limits trend economic growth, revenue potential and the external account, but that these pressures are offset to some extent by relatively high income levels, political stability and a moderate capacity for policy adjustment.
Fiscal risks associated with an elevated debt burden are mitigated by sizable financial cushions, Moody's said, pointing in particular to the Heritage and Stabilization Fund as a fiscal financing backstop.
On production expectations, Moody's anticipates a material increase in oil and gas production from late 2027 following final investment decisions on several large upstream projects. The agency projects natural gas output will rise as new fields come onstream, naming Manatee, Ginger and Aphrodite as the projects that together should increase production toward roughly 3.0 to 3.5 billion cubic feet per day, up from about 2.5 billion cubic feet per day at present.
Moody's forecasts the adjusted general government debt-to-GDP ratio to peak at approximately 85% in fiscal 2026 before declining thereafter.
Country ceilings were left unchanged: the local currency ceiling remains at Baa2 while the foreign currency ceiling stands at Ba1. Moody's explained that the three-notch gap between the local currency ceiling at Baa2 and the sovereign rating reflects the economy's substantial exposure to the hydrocarbon sector with knock-on effects for non-energy activity, balanced by only moderate exposure to domestic and geopolitical risk.
Implications for markets and policy
Moody's assessment points to a near-term easing of external pressures for Trinidad & Tobago driven by commodity price assumptions and a front-loaded debt management operation. However, the pace of improvement in public finances and external metrics remains contingent on the development timetable for new gas projects and the trajectory of oil and gas prices.