Premier On S&P Global Ratings Affirmation

“S&P has reaffirmed Bermuda’s A+ long-term sovereign credit and senior unsecured debt ratings, A-1 short-term rating, and AA+ transfer and convertibility assessment, with the outlook assessed as Stable,” Premier and Minister of Finance David Burt said in the House of Assembly today [May 17].

The Premier’s full statement follows below:

Mr. Speaker, I rise this morning to inform this Honourable House of the positive results of S&P Global Ratings [S&P]‘s recent sovereign ratings review.

During the week of April 15th, 2024, S&P Global Ratings conducted its annual ratings review of Bermuda. The purpose of the review was to assess the country’s creditworthiness and to determine the level of risk associated with lending to Bermuda.

When evaluating a country’s creditworthiness, a credit rating agency assesses the country’s ability and willingness to service its financial obligations to commercial creditors on time and in full. Both quantitative and qualitative considerations form the basis for these forward-looking assessments.

To make its determination for Bermuda, S&P met with the Ministry of Finance and the Department of Statistics, as well as a number of other persons and entities in the public and private sectors. Those interviewed outside of government agencies include the Governor, the Bermuda Monetary Authority, the Association of Bermuda Insurers and Reinsurers, the Bermuda Tourism Authority, and the Bermuda Business Development Agency.

I am pleased to announce that after evaluating the information received through their discussions and research, S&P has reaffirmed Bermuda’s A+ long-term sovereign credit and senior unsecured debt ratings, A-1 short-term rating, and AA+ transfer and convertibility assessment, with the outlook assessed as “Stable.”

In explaining the rationale for the rating affirmation, S&P stated, “The stable outlook reflects our expectation that the local economy will remain healthy and support solid government finances and low debt, as well as Bermuda’s external asset position. We believe continued growth will support a balanced budget in line with the government’s expectations this year. We assume a commitment to fiscal consolidation will lead to balanced budgets and a slight decrease in net general government debt over the next three years.”

In the report published on May 7th, S&P indicated that Bermuda’s economy is on track to grow by about 3% in 2024, following an estimated increase of 4% in 2023 and 6.4% in 2022. Solid growth reflects continued growth in the international business sector, where Bermuda is a global leader in the insurance and reinsurance sector. In addition, tourism continues to rebound from the pandemic.

The combined opposition would like the people of this country to believe that this historic economic growth is solely a result of the international business sector and has nothing to do with the Government’s economic policies. However, in their report, S&P contraindicated this narrative by praising Bermuda for its ‘strong institutional framework and prudent policymaking’—a clear nod to our government’s foresight and disciplined approach.

These comments help validate the government’s economic policies and our commitment to moving this country towards stable long-term economic growth combined with fiscal discipline.

S&P is a highly regarded, internationally recognised rating agency. The Opposition refers to it as the “gold standard of rating agencies,” and so the public should accept this report as an independent and objective endorsement of our fiscal and economic policies. As a government, we are encouraged that S&P has acknowledged the economic progress we have made thus far.

We recently made a $50 million repayment towards our national debt, are on the path towards the first balanced budget in over 20 years, and announced the lowest unemployment rate since 1980 earlier this month.

We have successfully rolled out 67 affordable housing units, recently celebrated a record-breaking opening of our cruise season, and are making tangible steps towards implementing the most fundamental tax reform in Bermuda’s history.

While the report was largely positive and endorsed the hard work the Government has done to date, it is also important to note that we must continue to be vigilant and maintain our prudent approach to managing the country’s finances and work towards a budget surplus.

Before I close, I would like to thank all of the stakeholders who met with S&P and helped to ensure their confidence in Bermuda.

I would like to emphasise that this Government is fully committed to implementing reforms that will ensure the long-term sustainability of public finances and broad economic growth while reducing taxes to ease Bermuda’s cost of living. The successful implementation of the Economic Recovery Plan, the Global Minimum Tax, and increased investment within Bermuda will ensure that Bermuda prospers and that credit rating agencies continue to endorse its creditworthiness.

Thank you, Mr. Speaker.

#BermudaPolitics

Category: All