S&P upgrades The Bahamas’ credit rating to ‘BB-’ with stable outlook

S&P Global Ratings has upgraded The Bahamas’ long-term foreign and local currency sovereign credit ratings to ‘BB-’ from ‘B+’, citing stronger economic performance and steady fiscal management.

The outlook remains Stable, reflecting confidence in the country’s ability to maintain recent economic gains.

The September 26 rating action comes as The Bahamas posts stronger-than-expected growth driven by robust tourism and increased investment across the Family Islands. “The stronger economy, propelled by strong cruise tourism and large-scale investment projects, and the government’s tax compliance efforts have helped reduce the fiscal deficit and contained the sovereign’s debt burden,” S&P said.

The agency credited several key factors for the upgrade:

• Stronger economic performance, with GDP expanding 3.4% in 2024 and projected to grow 2.1% in 2025, aided by improved data collection from the Bahamas National Statistical Institute.

• Record tourism arrivals, reaching 11.2 million visitors in 2024 and 6.3 million in the first half of 2025.

• Fiscal improvements, as the deficit narrowed to 1.3% of GDP in FY 2023/24, returning to pre-pandemic levels.

• Energy sector reforms aimed at strengthening the finances of Bahamas Power and Light and other public entities.

S&P also highlighted the government’s commitment to fiscal discipline, noting that refinancing risks have eased and projecting public debt to fall to 66.3% of GDP by the end of 2025, down from 77.8% in 2020.

Looking ahead, the agency expects GDP growth to remain solid and align with peers of similar development levels, provided the government maintains prudent fiscal policies. Further upgrades could follow if The Bahamas sustains balanced budgets and strong growth, in line with targets set in the 2025 Fiscal Strategy Report.

The upgrade builds on a series of recent positive ratings developments, including Moody’s revision of The Bahamas’ outlook to Positive from Stable and Fitch’s inaugural BB- / Stable rating earlier this year. It also follows the country’s successful return to international capital markets in June, signaling improving investor confidence and strengthened credit perception.