S&P reaffirms Bermuda’s credit ratings
Ratings agency Standard & Poors has reaffirmed Bermuda’s A+ sovereign credit and long and short term debt ratings, the finance minister announced last night.
The reaffirmation of Bermuda's A+ long-term sovereign credit and senior unsecured debt ratings as well as its A-1 short-term rating and its AA+ transfer and convertibility assessment as “Stable” were welcomed by Curtis Dickinson, who was forced to take on $360 million in added debt due to the Covid-19 pandemic.
Mr Dickinson stated: “I am delighted that S&P has reaffirmed Bermuda’s A+ long-term sovereign credit and senior unsecured debt ratings and that the outlook remains stable.
“It is noteworthy that S&P has highlighted, in their report, that ’the stable outlook reflects our expectation that Bermuda's moderate net general government debt burden, favourable external position (including current account surpluses), and political stability will help contain the negative impact of a sharp GDP contraction in 2020 and set the stage for economic recovery’.”
Maintaining a stable debt rating helps Bermuda to borrow money at competitive rates. A downgrade would force it to pay more interest on new debt or on rolling over borrowing when it comes due.
Mr Dickinson added: “In addition, S&P has recognized that Bermuda benefits from institutional stability and its track record of implementing reforms to ensure sustainable public finances and economic growth over the long term.”
Mr Dickinson said Bermuda’s efforts to contain the Covid-19 virus helped the Government “to limit the damage done to the economy and ensure our economy begins to recover in the near term”.
He added: “The actions taken to date are seen as positive and has been appropriately reflected in this update on our credit ratings.
“It is very reassuring that S&P views ’Bermuda’s policymaking as largely effective, predictable and proactive’. It is also positive that the rating agency recognises that the Government will implement reforms to ensure the long-term sustainability of public finances and economic growth over the long term.”