Bermuda Sovereign Ratings
Following section provides the credit ratings of Bermuda over the past several years as assigned by reputed international credit rating agencies. The ratings are shown in chronological order (older to newer).
Update November 2010: Fitch rating of Bermuda has been affirmed at AA+. Fitch is a global credit rating agency widely accepted and recognized by industries and nations worldwide. The sovereign credit rating of AA+ is just a notch below AAA which is the highest rating by Fitch. The rating ensures that Bermuda continues to enjoy a good credit rating globally and its borrowing cost would be considerably lower than those nations with lower ratings. This rating by Fitch has been backed mainly by Bermuda's continued strength in institutions, high per capita income, current account surplus and relatively low public debt burden compared to the peer nations.
However Fitch has also made observations that, since Bermuda's base of economy is narrow and hinges primarily on International Business and Tourism, its ability to absorb economic shocks is lower compared to the high graded sovereigns.
Some of the other key factors that were considered while arriving at the rating included Bermuda's strong legal system, locally available qualified human resources, and favorable Tax regime that attract the international insurance and financial services companies on a sustained basis. Another positive aspect is, Bermuda's debt ratios are 40% lower than the average of all the other nations that fall in the AA categories (AA-, AA and AA+). This is despite the fact that the debt levels of Bermuda have risen in the recent time. Fitch stated that after 1992, Bermuda has gone through the worst ever impact in its economy due to the global recession. However, Fitch believes that the island is now slowly coming out of the bad patch and on its way to a gradual economic recovery.
Update June 2012: Fitch has downgraded Bermuda's Long term foreign currency IDR from AA+ to AA, and long term local currency IDR from the highest rating of AAA to AA+. They have stated the reason for this as "weak macroeconomic performance relative to peers, deteriorating fiscal and government debt ratios and lack of a credible fiscal consolidation strategy."
Update May 2013: Moody's has downgraded Bermuda's credit rating to Aa3. This is mainly due to steep rise in government debt coupled with failure to recover from the economic downturn. The government debt has risen from 5.9% of GDP in the fiscal year 2007/2008 to 28.1% in 2012/2013. The outlook continues to be negative as the new government OBA's budget indicates that the debt will further rise to beyond 30% in the coming year.
Update June 2013: Fitch has downgraded Bermuda government bond rating from AA to AA- and also changed the outlook to negative. They attributed the reasons for such sovereign rating to continued contraction of economy over the past four years, increased government debts and high fiscal deficits.
Update April 2014: Standard & Poor has accorded a sovereign rating of AA-/A-1+ to Bermuda and confirmed that the outlook remains negative. The rating is based on Bermuda's position of attracting and retaining foreign services companies which mainly comprise of re-insurance industry, current external asset position, fiscal deficits etc.
Update June 2014: Fitch has downgraded its rating on long term IDR (Issuer Default Rating) of Bermuda to a+ from AA-. This is mainly on account of further contraction of Bermuda's economy in 2013 and increase of non-employment.
Update April 2015: Standard & Poor has recently downgraded Bermuda's rating from AA- to A+ while changing the outlook to stable. They cited weak economy and low public finance being the main reasons behind such revisions.
Update May 2016: Standard & Poor has raised Bermuda's long term credit and debt ratings to A+ and mentioned that the 6-year long economic contraction has come to an end. The long term outlook is stable. The factors that influenced the ratings include moderate and improved fiscal deficits, low debt burdens, effective policy making etc.
Update June 2016: Moody’s Investment Service has downgraded Bermuda's rating from A1 to A2 with a stable outlook. The reason for downgrades are primarily due to comparative difference with A1 peers in the areas of economic and fiscal strengths.
Update April 2018: Standard & Poor has upgraded Bermuda's Sovereign rating to 'A+' and affirmed the outlook as stable due to Bermuda's positive economic growth and higher GDP.
Update May 2019: Standard & Poor has accorded A+ long-term sovereign credit and senior unsecured debt ratings, A-1 short-term rating and AA+ transfer and convertibility assessment on Bermuda.
Update August 2020: Standard and Poor has affirmed A+ rating for long term sovereign credit and senior unsecured debt ratings of Bermuda and has mentioned that the outlook remains stable.
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