November 29, 2020

Cayman maintains its triple “A” rating

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After a period of scrutiny, international ratings agency, Moody’s has maintained its triple “A” rating for Cayman.

Moody’s experts said in it’s most recent assessment that the island strong institutions further support the rating.

It says its stability has been achieved because of low debt and strong economic development and looked forward to a modest surplus in the coming year.

“Significant negative structural changes in the Cayman Islands’ main sources of growth coupled with a steady erosion of public finances could lead to negative rating actions,” the agency said.

The agency noted that “recent actions by the government have reduced the fiscal deficit and appear likely to result in fiscal surpluses and drops in the debt numbers, supporting the current outlook,” it said.

A positive outlook could be considered, the agency said, in the event of a significant reduction of overall projected debt levels and a policy framework that makes it unlikely to return. Alternatively greater growth that pushed per capita GDP even higher relative to peers could lead to an upgrade.

It tempered that by noting that the rating could fall if the Cayman government’s efforts to limit the
increase in the debt ratios fail, either due to policy reasons, a slower economic recovery or both.

“While Moody’s does not have a specific numerical target that would trigger a change in outlook, given that long term growth prospects for Cayman are modest and the economy has little diversification, we see the current levels of debt, measured as percentage of GDP and percentage of revenues, as relatively high for the country,” its experts warned.

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