S&P Affirms the Bahamas at 'BB-' with Stable Outlook on Economic Resilience

• On September 28, 2026, S&P affirmed the Commonwealth's long-term foreign and local currency sovereign credit ratings at 'BB-' with a stable outlook and kept its transfer and convertibility assessment at 'BB'. The outlook reflects expectations that the government will remain committed to conservative fiscal policies and manage contingent liabilities from state-owned enterprises (SOEs) without putting its debt trajectory at risk.
• Growth is expected to moderate but remain above potential, supported by cruise tourism and investment across the Family Islands. GDP growth is forecast at 2.5% in 2026, down from 4.2% in 2024 and 3.8% in 2025, with GDP per capita estimated at US$43,000. Tourist arrivals reached 12.5Mn in 2025, up from 11.2Mn in 2024 on the back of strong cruise passenger growth, although S&P noted that the economy remains highly dependent on tourism and that labor constraints weigh on long-term growth.
• Fiscal outcomes have improved, although the rating agency sees surpluses as difficult to achieve without meaningful reform. The reported fiscal deficit was 0.5% of GDP in FY2025 (ended June 30) and 0.9% of GDP in the first three quarters of FY2026, while the government expects to end the fiscal year with a small surplus. Net general government debt is projected at 66% of GDP by end-2026, down from 77.9% in 2020, and interest payments are expected to remain above 15% of revenue for at least the next three years. Refinancing needs remain notable, with 27.4% of government debt maturing within the next year and foreign currency debt accounting for 46.6% of the total.
• External buffers remain adequate, but loss-making SOEs continue to pose risks to public finances. Foreign exchange reserves reached US$3.20Bn as of June 2026, and a renewed fuel hedge with Citibank is expected to offset some of the inflationary pressure, with inflation reaching 4.2% in April 2026. However, S&P cautioned that the government's purchase of the Grand Bahama Power Company Ltd. has increased contingent liabilities and could lead to higher subventions, which already absorb around 14% of total expenditure.
• S&P expects the government to refinance its debt mostly through the domestic banking sector, alongside multilateral and international bank loans, and considers refinancing risks to have abated given the domestic banks' capacity to absorb additional government financing. With US$2.60Bn in external bonds outstanding and the potential for further issuance in international markets, the stable outlook points to limited near-term ratings pressure on Bahamian debt, provided fiscal consolidation stays on track and SOE-related contingent liabilities are contained.

(Source: S&P Global Ratings & NCBCM Research)