Standard & Poor’s announced in New York yesterday that its Ratings Services had assigned ‘A-‘ long-term and ‘A-2’ short-term Sovereign Credit Ratings to The Commonwealth of The Bahamas. The outlook on the long-term rating is stable.
*”The ratings on The Bahamas reflect its political stability, prosperous (though narrow) economy, and steady macroeconomic stance,”* according to S&P’s Sovereign Analyst Olga Kalinina. She continued that despite some deterioration following September 11, *”The Bahamas has a prudent fiscal posture that supports the fixed parity with the U.S. dollar, which has been in effect since 1973.”*
Although the net external debt of the banking sector will approach 30% of current account receipts this year, some 85% of the cross-border bank funding comes from related parties, which reduces the risk that external finance will be cut off. Accordingly, Standard & Poor’s views the Bahamian banking system as “sound”.
The report from S&P also states that the stable outlook balances ongoing achievements in attracting investment in tourism and financial services and the expectation of progress in tax reform and privatisation against the challenges of managing a narrowly based economy.
A merger in 1941 of Standard Statistics and Poor’s Publishing Company established S&P which has become a pre-eminent global provider of independent highly valued investment data, valuation, analysis and opinions.
Earlier this year, Moody’s Investor Services maintained its A-3 Investment Grade rating on The Bahamas’ Sovereign Debt, also with a stable outlook.