KBRA raises outlook on Bermuda’s long-term ratings
The outlook on Bermuda’s long-term credit ratings has been revised upward by KBRA, to positive from stable.
The ratings agency also affirmed the island’s long-term issuer ratings of A+ for Bermuda and affirmed short-term ratings of K1+.
KBRA’s report said Bermuda’s ratings reflect its high wealth and strong institutions, including a top-quality regulatory environment, which underpins its status as a financial hub.
Bermuda’s positive outlook reflects the constructive structural shift to government finances provided by the new corporate income tax (CIT), the rating agency said.
The agency said positive rating momentum could arise should net government debt be reduced in a meaningful way and should pension reform proceed.
The report’s rating’s outlook said: “While risks exist, mainly because of the likely variability of corporate profits, expectations for significantly higher revenue mobilisation will facilitate debt reduction and the roll-out of payroll and other tax deductions to the benefit of the economy.
“The world-class status of Bermuda’s international business services sector and innovativeness as a hub in emerging financial industries position the island well for continued prosperity.”
Key credit considerations include that the debt burden is balanced by large external assets principally in the Public Service Superannuation Fund and the Contributory Pension Fund.
The report said: “The government’s net external asset position stands at about -4 per cent of gross domestic product (end-3Q, 2025), although the CIT reform should revert that ratio to surplus soon.
“Fiscal restraint is integral to policy, and the government is planning to use the windfall judiciously, including debt extinguishment.
“The fixed-rate, long-term profile of government debt moderates risks. Payroll taxes will be less important to the fiscal position with new CIT receipts, which account for an expected 37 per cent of budgetary receipts in the current fiscal year.”
The report added: “Income inequality and per capita income are high, common across many global financial centres. Low unemployment and favourable indicators of health and welfare (for example, life expectancy averages about 82 years) limit political risks as well.
“Policymaker commitment (and demonstrated ability) to strengthen employment prospects and focus on improving affordability for Bermudians contributes to political and social stability.”
• For more on the Bermuda Sovereign Surveillance Report, see Related Media
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