Fitch Ratings has assigned a long-term foreign currency rating of ‘AA-’ to the Government of Bermuda’s USD750 million Global bond (4.854% coupon) maturing in 2024. The proceeds will go toward repaying public debt and fund current and future budget deficits, the rating agency has announced.Fitch stated that the rating is in line with Bermuda’s long-term foreign currency Issuer Default Rating (IDR) of ‘AA-’ with a negative outlook.On June 7 Fitch downgraded Bermuda’s ratings and revised the outlook to negative from stable.Explaining its decision to rate the bonds AA-, Fitch said: “Bermuda’s ‘AA-’ ratings are supported by Bermuda’s wealth — the fourth-highest GDP per capita among Fitch-rated sovereigns — and its high savings rate relative to its ‘AA’ peers. Bermuda maintains its competitive advantage as a domicile for reinsurance and financial services companies due to its sophisticated legal system, strong regulatory framework, simple tax regime, proximity to the US and highly-skilled human capital.“Bermuda’s ratings are constrained by years of economic contraction, sustained high fiscal deficits, and increased government debt burden. The sovereign’s ability to sustain higher levels of debt is constrained by its narrow revenue base and its underdeveloped domestic public debt markets. Bermuda’s lack of economic diversification and excessive reliance on mature industries is limiting its growth prospects.“The Negative Outlook reflects continued uncertainty as to Bermuda’s fiscal and economic trajectory and the lack of a credible fiscal consolidation strategy.”Fitch warned: “The rating on the aforementioned bonds would be sensitive to any changes in Bermuda’s long-term foreign currency IDR.“Lack of a credible plan to consolidate public finances, continued deterioration in the sovereign’s fiscal metrics and weaker-than-expected economic growth could put downward pressure on the ratings. Regulatory changes that hurt international companies operating in Bermuda could also undermine creditworthiness.“Resumed economic growth and concrete signs of fiscal consolidation and debt stabilisation could reverse the current Negative Outlook on Bermuda’s ratings.”