NASSAU, Bahamas, CMC- The US-based Moody’s Ratings (Moody’s) has upgraded its long-term issuer and senior unsecured ratings on The Bahamas to ‘Ba3’ from ‘B1′, changing the country’s outlook from stable to positive.
Moody’s said the upgrade was a result of sustained strengthening in fiscal performance and of the improved government’s liquidity and funding profile, supported by “lower net borrowing requirements, increased reliance on longer-term multilateral financing, and active liability management”.
Moody’s said it had earlier this week discussed the ratings with the Phillip Davis government and that “the main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have materially increased.
The issuer’s institutions and governance strength have materially increased. The issuer’s fiscal or financial strength, including its debt profile, has materially increased.
“The issuer’s susceptibility to event risks has not materially changed. An analysis of this issuer, relative to its peers, indicates that a repositioning of its rating would be appropriate,” Moody’s said in its statement, adding that the government has established a credible track record of large primary surpluses, supported by stronger revenue collection, policy measures that broaden the tax base, and continued expenditure restraint.
It said that the “revenue performance has become more durable, extending beyond the cyclical support from tourism”, projecting that “primary surpluses average approximately four per cent of GDP (gross domestic product) between fiscal 2026 and fiscal 2028”, which it characterizes as “among the strongest outcomes for similarly rated sovereigns”.
Moody’s also noted that the government debt will decline from 72.5 percent of GDP in the financial year 2025 to approximately 68 percent by the financial year 2027 and that it expects the energy sector reform to “reduce contingent liabilities from the state-owned enterprises, as the operational and financial burden on the government diminishes”.
Moody’s further noted a “meaningful improvement in the sovereign’s liquidity risk profile”, reflecting reduced net borrowing needs due to sustained primary surpluses and active liability management, alongside improved financing conditions as the domestic investor base stabilized and the “government’s financing strategy shifted toward longer-tenor, more concessional sources”.
Further upgrades in the short to medium term are possible should The Bahamas demonstrate “a sustained improvement in debt affordability”, “a faster-than-expected decline in government debt”, and greater “access to financing on concessional terms”.
Moody’s ratings upgrade reflects the strong momentum in The Bahamas’ credit trajectory, building upon S&P’s upgrade to ‘BB-‘from ‘B+’ in September 2025 and Fitch’s ‘BB- / Stable’ inaugural credit rating affirmed in April 2026.
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