S&P: Bermuda outlook negative

Standard & Poor's said it revised its outlook on Bermuda to negative from stable and affirmed its AA long-term and A-1+ short-term sovereign credit ratings on the country.

The outlook revision stems from what S&P views as risks to Bermuda's external and fiscal position from its banking system. The island's banking system services its large reinsurance sector and is an offshore financial system in its own right, the agency said. With external assets at 251% and external debt of 127% of GDP at year-end 2008 by S&P's estimates, it is large relative to the local economy.

The agency said that should the island's banking sector weaken or should the dynamism of its reinsurance market wane, the ratings could come under pressure.

Supporting the rating on Bermuda is low government debt - among the lowest of rated sovereigns, the agency added.

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