Aug 2016 Financial News

Moody's downgrades Bahamas ratings

Aug 24, 2016

NEW YORK—International lending agency Moody’s Investors Service has downgraded the bond and issuer ratings of the government of The Bahamas to Baa3 from Baa2 and has changed the outlook to stable.

On Monday, Moody’s said the rating actions conclude a review for downgrade that commenced on July 1.

Moody’s identified the key drivers of the downgrade as prospects of low medium-term growth, pointing to weaker economic strength relative to similarly-rated peers, and the “persistent increase” in the government’s debt ratio, which “leaves the Bahamas with less fiscal space relative to rating peers.

“The stable outlook on the rating reflects Moody’s expectation that sovereign credit metrics will remain in line with a Baa3 rating as fiscal consolidation will continue over the coming years and that government debt metrics will likely stabilise in fiscal 2016/17 as the deficit declines,” the statement said.

The stable outlook also incorporates the expectation that economic performance will strengthen in 2016-18, returning to levels close to the Bahamas; potential growth of 1-0 per cent-1.5 per cent, Moody’s said.

“Under this baseline, we would see a stabilisation of the Bahamas’ key economic and fiscal metrics, although these metrics would remain weaker than for most Baa rating peers.” (CMC)

Source:
Trinidad Guardian, A15
Wednesday August 24, 2016