BANGALORE (Thomson Financial) - Moody's Investors Service said the Cayman Islands' 'Aa3' foreign currency bond rating underscores the economic resiliency but the upward movement in the ratings is limited by vulnerability to hurricanes, dependence on outside sources of growth, and some fiscal inflexibility given a revenue base that excludes direct income taxation.
In its annual report on the Cayman Islands, Moody's (nyse: MCO - news - people ) said the ratings are supported by a very high GDP-per-capita ratio and very strong governance indicators, reflecting sound institutions and a high degree of policy predictability.
Moody's added that despite the borrowing plans in current fiscal year budget and some fiscal deterioration associated with rising capital expenditures, the Cayman Islands' level of indebtedness remains manageable and still well within the ratings' cohort.
Moody's said it expects the global financial shocks will not severely affect the Cayman Islands' financial services industry.