Can’t say you weren’t warned, but this is still a serious blow to Jamaica.

From rating agency Standard & Poor’s on Monday, highlighting mine:

Jamaica Long-Term Ratings Lowered One Notch To ‘CCC’, Outlook Negative

— Jamaica’s Central bank governor, who was the lead negotiator on a possible standby facility from the IMF, has resigned.

— We are lowering the long-term foreign and domestic currency ratings on Jamaica to ‘CCC’ from ‘CCC+’.

— The negative outlook on the ratings signals the growing risk of a debt exchange operation that could be an event of selective default under our distress debt exchange criteria.

NEW YORK, Nov. 2, 2009–Standard & Poor’s Ratings Services lowered its long-term foreign and domestic currency ratings on Jamaica to ‘CCC’ from ‘CCC+’. The outlook on the ratings is negative.

We kept the recovery rating on the senior unsecured debt at ‘4’ and the country transfer and convertibility (T&C) assessment at ‘B’.

The downgrade on Jamaica follows the resignation of Central Bank governor Derick Latibeaudiere, who was the lead negotiator within the framework of a possible standby facility from the International Monetary Fund (IMF).

On Aug. 5, 2009, we downgraded Jamaica’s domestic and foreign currency long-term ratings to ‘CCC+’ with a negative outlook. At that time, we highlighted the fact that Jamaica’s severe fiscal situation as well as the vulnerabilities in the government’s debt profile may give it incentives to renegotiate with its creditors, particularly its resident creditors that hold the larger bulk of Jamaican debt.

“Since then, the government’s room to maneuver continues to narrow as it becomes increasingly difficult to further cut public expenditures–as reflected, in part, in the recently amended budget–in order to sustain an interest burden of about 60% of general government revenue,” said Standard & Poor’s credit analyst Roberto Sifon Arevalo.

The negative outlook on the ratings signals the growing risk of a debt exchange operation that could be an event of selective default under our distress debt exchange criteria. While the government’s engagement with the IMF is a positive effort to address the long-standing structural issues in Jamaica, recent events highlight the complexity of the negotiation process and create more uncertainty about the timeframe for reaching an agreement with the Fund.