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S&P raises Bahamas short-term credit rating

Standard & Poor's has raised its short-term foreign currency sovereign credit rating on The Bahamas to A-2 from A-3 due to revision of criteria. 

Tuesday, August 7, 2012
Tuesday, August 7, 2012

http://www.thebahamasinvestor.com/wp-content/uploads/2012/08/sandp.pngStandard & Poor’s Ratings Services (S&P) has raised its short-term foreign currency sovereign credit rating on The Commonwealth of The Bahamas to A-2 from A-3.

At the same time, it affirmed its BBB long-term issuer ratings on The Bahamas and noted that the outlook remains stable–reflecting a projected gradual tightening of the government’s fiscal stance over the next several years as growth turns positive, as well as generally stable external financing.

In addition, the transfer and convertibility assessment remains at BBB+.

The change in the short-term foreign currency resulted from the revision of S&P’s criteria on the linkage between long-term and short-term ratings for sovereigns. The Bahamas’ track record of political and macroeconomic stability has delivered high per capita gross domestic product (GDP), but the Bahamian economy remains vulnerable due to dependence on one primary sector and geographic market.

S&P projects growth of 2.5 per cent in 2012 and 2013 as tourism-related construction supports growth, despite a sluggish outlook for the US economy.

The agency said the ratings could come under pressure if The Bahamas’ fiscal deterioration persists and its economic base erodes more severely.

Conversely, the ratings could be raised if the government takes a more proactive policy response to reduce debt or if economic prospects strengthen, more sharply improving the country’s external balance sheet.

The Bahamas International Film Festival non-profit organization will host the biannual fundraiser Big Screen Art Scene September 1, where 50 attendees will receive a mystery work of art.

Preliminary indications are that the domestic economy maintained a mild growth momentum during June 2012, supported by gains in tourism sector output, alongside ongoing public sector and foreign investment-led construction activity, according to The Central Bank of The Bahamas' monthly review. Download the complete Central Bank of the Bahamas’ Monthly Economic and Financial Developments report here.

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