Bermuda was given the nod of approval by Kroll Bond Rating Agency (KBRA), affirming the island’s long-term issuer ratings and revising it from negative to stable.

The report says that the ratings were affirmed because of several key credit considerations, including the high wealth level and Bermuda’s per capita income of about $114,000.

Also factored in was the mitigation of the government gross debt ($3.35 billion) by large external assets — the government’s Public Service Superannuation Fund and Contributory Pension Fund.

Curtis Dickinson, the Finance Minister, said in a press conference that the positive report demonstrates the agency’s belief that the government has Bermuda on a stable path forward.

He said that it means confidence in Bermuda maintaining a comparatively favourable position to continue to have access to needed capital.

That is an important distinction.

The government had to commit to fiscal management as a critical undertaking to bond investors during the 2020 debt refinancing. It is a central point in government’s Economic Recovery Plan, published earlier this year.

Mr Dickinson said that the Kroll assessment affirms Bermuda’s long-term rating at A+ with an improved outlook. The short-term rating was affirmed at K1+.

The A+ long-term rating is in the third tier of the agency’s rating index and indicates that the bond issuer is determined to be of high quality, with a small risk of loss because of credit-related events.

The minister also noted that the K1+ short-term rating is in the top tier of KBRA’s rating index, indicating that the issuer has an exceptional ability to meet short-term obligations.

Mr Dickinson said: “KBRA has indicated that the decision to revise Bermuda’s outlook from negative to stable reflects the government’s commitment to fiscal restraint and expectations for a modest economic recovery over the medium term.

“It is noteworthy that the report also states that the A+ rating was affirmed due to Bermuda’s strong institutions, including a high-quality regulatory environment which underpins the country’s status as a financial hub.

“KBRA also indicated that prospects for expanding new niche industries, especially in fintech and digital assets, underscores Bermuda’s capacity to position itself for investment opportunities.

“The report also has a section dedicated to the government’s response to the Covid-19 pandemic.

“It highlighted that the government’s Covid-related fiscal measures included substantial healthcare spending, temporary unemployment benefits, tax postponement, payroll tax relief for the most-afflicted sectors of the economy and assistance to small businesses.

“These measures formed part of the government’s response to the pandemic, and KBRA’s assessment demonstrated that the actions taken were considered prudent and effective.“

The report adds: “Bermuda, like many economies exposed to tourism, experienced an external shock from the collapse in tourism receipts when the pandemic hit, and this was on top of the domestic shock from lockdown.

“However, Bermuda’s resilience has been much more robust than initially expected.”