Fitch Affirms Bermuda’s Currency Ratings

by Amanda Banks, Tax-News.com, London

05 August 2004

Fitch Ratings, the international ratings agency, has affirmed the long-term foreign currency rating of 'AA' and the long-term local currency rating of 'AAA' for Bermuda, whilst maintaining a Stable rating outlook.

Noting that Bermuda's position as an offshore centre “remains solid” and will continue to provide growing benefits to the Bermudian economy, the Fitch analysis stated:

“High per capita income, consistent GDP and foreign currency earnings growth, prudent fiscal policy, an established track record of financial, and exchange rate stability, as well as a mature domestic political system support Bermuda's long-term foreign currency rating of 'AA'.”

Despite the high financial cost of Hurricane Fabian, Fitch observed that the storm failed to significantly dent Bermuda’s economic growth, which came in at a better-than-expected 2.5% in the final quarter of 2003.

The government has estimated the cost of the damage wrought by the storm to be in the region of $160 million to $180 million, although most of this was covered by insurance.

The fiscal effect of Hurricane Fabian was minimal, stated the report, with the government having to spend an additional $10 million to cover uninsured damage.

The greatest constraint on the country’s rating identified by Fitch is the limited information concerning the debt of foreign-owned entities residing in Bermuda.

However, the analysis concluded that these liabilities are highly unlikely to affect Bermuda's public finances or the domestic financial system.

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