Cayman maintains and continues success in Financial Services
According the government, quoting a new credit rating report, the Cayman Islands not only continued to maintain its leadership position in international financial services and national economic performance, but also also is managing to move ahead of competitor.
Moody’s – an international credit rating agency and an independent provider of economic information – has raised Cayman’s ratings. The Cayman Islands’ ceiling for foreign currency bonds and notes rose from Aa3 or high grade to Aaa or exceptional. This means that now the jurisdiction is alongside the US, UK, Canada and Bermuda. Although the foreign currency country ceilings were raised for approximately 70 countries, the Cayman Islands is among only 3 countries the ceilings of which were upgraded to Aaa.
In accordance with Moody’s advice, an Aaa country ceiling for foreign currency bonds and notes can be interpreted as “having the best and/or exceptional quality with the smallest of investment risk”. This means that Moody’s expects a very low risk that a limit on the foreign currency debt payments of the borrowing entity will be imposed by the government.
As to the Cayman foreign currency ceiling for short-term debt of P-1, it was already at the highest ratings category for short-term debt – this position has been held by Cayman since 1997.
The highest rating of P-1 in the area of foreign currency deposits with local banks has been held by the Cayman Islands since 1989. This is the ceiling which is applicable to onshore-licensed banks in Cayman.
The Cayman Islands continues to maintain an Aa3 (high grade) ceiling for long-term foreign currency bank deposits and an Aa3 rating for government bonds issued in foreign currency.
The Aa3 long-term foreign currency bank deposit ceiling places the offshore jurisdiction on one level with Hong Kong. It also places it a level above the Bahamas and the rest of the Caribbean. Also, Cayman government’s Aa3 rating is the highest in the Caribbean.
Positive macroeconomic and political factors that contributed to Cayman’s current ratings has been listed by Moody’s. This list included the following:
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the stable political environment and the current administration’s commitment to the Public Management and Finance Law;
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the well-established tradition of fiscal prudence;
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no pressure on the currency board regime or the exchange rate;
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Cayman’s recovery efforts from the effects of Hurricane Ivan which boosted growth and investment and produced an exceptional surge in exports;
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the level of public debt contained despite large reconstruction costs.