A major bond-rating agency granted Turks and Caicos a favorable credit rating this week, marking a significant milestone in the young nation's development.
New York-based Standard & Poor's Financial Services announced the country's "BBB+" sovereign credit rating on Tuesday, Jul 1. It's the first credit rating ever assigned to the TCI government, and officials expect it to reduce government costs and offer private investors lower rates on borrowing.
A BBB rating is the entry-level qualification in what S&P calls its Investment Grade category -- the highest type of long-term credit ratings offered by the company. Lenders use the designations as relative indicators of risk when establishing interest rates. Only AAA, AA and A offer access to lower market rates.
S&P defines a BBB rating as "Adequate capacity to meet financial commitments, but more subject to adverse economic conditions," with the "+" denoting relative standing within the category.
Long-term ratings below BBB are designated "Speculative Grade."
TCI Premier the Hon. Dr. Rufus Ewing had been anticipating a rating from S&P, but said this week's BBB+ designation was at the high end of his expectations, putting the nation on par with regional neighbors Aruba, Curacao and Montserrat. He called the announcement crucial to the country's economic plans.
“We can take great pride in noting that this terrific rating news bucks the trends of other Caribbean economies, some of whom have been recently downgraded and given negative outlooks," he said.
The TCI Government holds about $121 million in debt, and hopes to have that number down to about $85 million by 2016, when a UK loan guarantee expires. After the global financial and local government crises of 2008-10, the nation has been on a fiscal comeback -- first under UK administration, but more recently under home rule.
Over the past four years, Turks and Caicos has turned its annual deficits into surpluses, including $47.6 million in fiscal 2012-13, and $30.7 million in 2013-14.
Standard & Poor's Turks and Caicos decision cited anticipated GDP growth of 3 percent over the next three years, and touted the positive effects of multiple tourism projects.
"This is terrific news for the Turks and Caicos economy, and just reward for the hard work of everyone who has helped the country reach this latest stage in its development,” said His Excellency Governor Peter Beckingham.”