Bermuda’s foreign-currency long-term sovereign credit rating has been lowered by Standard & Poor’s Ratings Services (S&P) who cited the Island’s lack of monetary flexibility as a credit weakness.The ratings agency yesterday cut Bermuda’s local and foreign currency long-term sovereign credit ratings to ‘AA-’ from AA and affirmed its short-term ratings at ‘A-1+’ with a stable outlook.It said the ratings continued to be supported by the Island’s comparative advantages in the reinsurance sector, its political stability, prosperity and strong Government balance sheet, while the stable outlook reflected the balance of risks between fiscal flexibility and external vulnerabilities most notably potential changes in the US law impacting reinsurers and the health of its local banks.S&P said in its ratings revision: “The ratings on Bermuda reflect Standard & Poor’s opinion of the sovereign’s ‘very strong’ political and economic profile and ‘moderately strong flexibility and performance profile, as defined in our criteria.“Our ‘very strong’ political and economic profile appraisal rests on our view of Bermuda’s effective and predictable policy making and its stable political institutions.”It added: “Our political profile assessment also incorporates our view that public sector transparency trails that of many higher rated governments.”S&P said that it viewed Bermuda’s economy as being very strong but like all small jurisdictions faced the risks of economic concentration, weather and its reliance on the US, particularly for international business.The ratings agency said that the Island’s ratings could come under downward pressure if its favourable assessment of policymaking changed, as well as any new banking system problems that weaken its balance of payments or produced direct fiscal costs for Government. Markedly improved official data combined with a substantially more diversified approach, however, may lead to the rating being raised.A statement from Government said: “The Government is pleased that S&P has affirmed their stable outlook on Bermuda’s ratings. Bermuda’s short-term rating of A-1+ was also affirmed.“Though Bermuda, like a number of other jurisdictions, has seen its ratings adjusted due to a revision in S&P’s rating methodology, the Government is pleased that the underlying fundamentals and strengths of our Bermuda economy have been recognised and that our outlook remains stable.”