Not only does the Cayman Islands continue to maintain its leadership position in international financial services and national economic performance, but it is also moving ahead of competitors.
Moody's, the international credit rating agency, has raised Cayman's ceiling for foreign currency bonds and notes from Aa3 or high grade, to Aaa or exceptional -- placing it alongside the UK, US, Canada and Bermuda. This resulted from a change in Moodys' rating methodology last year which included raising the foreign currency country ceilings of approximately 70 countries. Of these countries, the Cayman Islands is among only 3 countries which had their ceilings upgraded to Aaa. The country ceiling is the highest rating obtainable for an issuer of long-term foreign currency-dominated bonds. Moody's is an independent provider of economic information that international banking and other lending institutions use as one of their guides on whether they should conduct business with entities within a country, or a government, and to what extent.Moody's advises that an Aaa country ceiling for foreign currency bonds and notes could be interpreted as "having the best and/or exceptional quality with the smallest of investment risk." This ceiling is based on Moody's assessment of a very low risk of a payments moratorium in the event of a government bond default."In other words Moody's expects a very low risk that the government will impose a limit on the foreign currency debt payments of the borrowing entity," Financial Secretary Hon. Kenneth Jefferson observed.The upgrade of Cayman's foreign currency ceiling for long-term debt to Aaa, placed the ceiling at the highest long-term rating category. The Cayman foreign currency ceiling for short-term debt of P-1 was already at the highest ratings category for short-term debt. Both ceilings imply a superior ability for repayment, leading market positions in well-established industries (e.g., offshore financial services), high rates of return, conservative capital structure, and well-established access to a range of financial markets. Cayman has held the P-1 rating since 1997.That highest rating of P-1 has also been in existence since 1989 in the area of foreign currency deposits with local banks. This ceiling is applicable to onshore-licensed banks in the Cayman Islands. P-1 rated banks are deemed to offer superior credit quality and have a very strong capacity for timely payments of short-term deposit obligations.
Leader of Government Business the Hon. Kurt Tibbetts commented: "The Government fosters a stable political environment and practises fiscal prudence - and will continue to do so. Both of these factors have a positive impact on the Islands' ratings."
Cayman continues to hold 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 Cayman on level with Hong Kong, and above the Bahamas and the rest of the Caribbean. The same is true for the government's Aa3 rating, which is the highest in the Caribbean.
Mr Jefferson said: "The continued excellent ratings by Moody's coupled with the fact that in one already high category the ceiling was raised, means that in the management of their financial affairs, Cayman Islands' entities and the Government have been prudent and efficient."
Moody's has listed a number of positive macroeconomic and political factors that contributed to Cayman's current ratings:
o "The country's recovery efforts from the effects of Hurricane Ivan which boosted growth and investment and produced an exceptional surge in exports;
o the stable political environment and the fact that the current administration is committed to the Public Management and Finance Law;o the level of public debt which was contained despite large reconstruction costs;
o the well-established tradition of fiscal prudence which is expected to continue; and
o "the absence of pressure on the currency board regime or the exchange rate."