Moody's Reaffirms Cayman's Aa3 Ratings

International credit rating agency Moody’s has maintained the Cayman Islands Government’s Aa3 bond issuer rating, Aaa country ceiling rating, and a ‘stable’ economic outlook in a report issued on Tuesday, 24 June 2025.

To support the Aa3 rating, Moody’s referenced the Cayman Islands’ low debt burden and substantial liquid reserves.

Minister for Finance & Economic Development, Hon. Rolston Anglin said, “The reaffirmation of our credit rating as well as the ongoing ‘stable’ economic outlook is testament not only to our Islands’ political stability, the overall strength of our economy, and the resilience shown in our post-pandemic economic recovery and growth, but also to the requirement to comply with the Public Management and Finance Act (PMFA) and the Framework for Fiscal Responsibility (FFR).”

He continued, “This rating for the Cayman Islands Government bolsters economic activity as it reinforces confidence in the jurisdiction, which then fosters more investment, increased economic activity and ultimately greater opportunities for Caymanians.”

A Moody’s rating committee was called to evaluate the rating of the Cayman Islands Government on 18 June 2025 and found that the Islands’ economic fundamentals and economic strength have not materially changed since the last review in June 2023.

A press release from Moody’s said, “The economy benefits from high per capita income, strong institutions, and a well-regulated financial sector that continues to grow despite global regulatory shifts. Although the economy is small and concentrated in financial services and tourism, its resilience is supported by sound governance and fiscal discipline, providing a strong buffer against external shocks.”

The Cayman Islands' rating is supported by a strong institutional framework. The government's fiscal policy is embedded in the Public Management and Finance Act and the Framework for Fiscal Responsibility (FFR). Under the FFR, the government must keep debt servicing costs and net debt below 10% and 80% of government revenue, respectively. As a result, the Cayman Islands' debt burden is well below that of similarly rated peers.

Minister Anglin explained, “The Aa3 sovereign rating remains in the top tier of Moody’s ratings system and is only three notches below the highest rating of Aaa. Bonds that are rated Aa are judged to be of high quality and are subject to very low credit risk.”

The Cayman Islands’ has a similar rating to countries such as Belgium, the United Kingdom, Hong Kong, Saudi Arabia, Ireland, France, Taiwan and the Isle of Man.

With nominal GDP of $7.6 billion in 2024, Moody’s noted that the Cayman Islands is significantly smaller than most other Aa-rated sovereigns, which have a median nominal GDP of $532 billion.

However, the rating agency said, “This small size is partially offset by very high income levels. At nearly $89,000 in 2024, Cayman's GDP per capita is higher than the $75,000 median for Aa-rated sovereigns, indicating a greater capacity for the population to absorb economic or fiscal shocks.”

The Cayman Islands’ debt-to-GDP ratio is also a fraction of the median ratio for similarly rated countries, with Moody’s explaining, “At just 6.4% of GDP at the end of 2024, the Cayman Islands' debt burden is far below the 41% of GDP average for other Aa-rated sovereigns.”

Much of the credit for the low debt ratio was attributed by the rating agency to the FFR. The report states that it expects government’s debt will remain below 10% of GDP, in line with the FFR.

The Moody’s report explains that the Cayman Islands’ rating could move upward or downward in future.

Upward movement could be gained through stronger economic growth and greater diversification, in addition to “a significant and sustained increase in fiscal buffers further strengthening the island's shock absorption capacity.”

Conversely, downward pressure on the rating would emerge if the Islands’ debt burden increases, even if still low relative to peers, combined with the economy's small size and limited diversification.

The report said, “Erosion of the Cayman Islands' strong fiscal position, evidenced by sustained fiscal deficits, or institutional changes that weaken restrictions on debt accumulation could put downward pressure on the rating.”

Moody’s economic outlook for the Cayman Islands is considered to be stable reflecting the rating agency’s expectations that the territory “will maintain its … macroeconomic stability despite its small and concentrated economy”.

Minister Anglin explained, “Moody’s noted that the economic outlook is based on the Government's continued commitment to prudent financial management, which the rating agency considers to be the lynchpin of our Islands’ resilience against external shocks, including those related to global financial regulation and climate-related risks.”

The Moody’s report said, “The Cayman Islands' well-established financial services and high-end tourism sectors will continue to support the economy. Despite its reliance on these two sectors, the economy has shown resilience and adaptability during economic shocks, supporting our assessment of policy

effectiveness and economic strength.”

From 2015 to 2019, the economy averaged real GDP growth of 3%, above the 2.5% median for Aa-rated sovereigns. After contracting by 5% in 2020, similar to other Aa-rated peers, the Cayman Islands' recovery has since outpaced that of peer economies.

The Moody’s report said, “We expect economic growth to average around 2.5% over the next three years, driven by steady growth in financial services and tourism.”

The Moody’s report observed that the Cayman Islands has developed a very large financial sector relative to the size of its economy, establishing the jurisdiction as the world’s 20th largest banking sector with cross-border assets totalling $369 billion (equivalent to 50 times its GDP) at the end of 2023.

The report said, “The Cayman Islands have established themselves as a global financial centre by offering a combination of tax neutrality, regulatory efficiency, and international credibility. The financial services sector is diversified across key sub-sectors, including banking, investment funds, structured finance, and securitization. More recently, the Cayman Islands have seen growth in the number of registered private funds and expansion in the insurance industry.”

Moody’s assessment of the Cayman Islands' risk profile reflects moderate exposure to environmental risks, mitigated by a very strong governance profile that supports the sovereign credit rating and capacity to deal with sudden shocks.

The Cayman Islands’ low governance risk is reflected in the strength of domestic institutions and rule of law as well as the institutional support provided by the Islands’ historical relationship with the United Kingdom.

Moderately negative risk factors were considered to be the Islands’ location in the Caribbean, small size and significant reliance on tourism, which are features that leave the Cayman Islands vulnerable to the physical effects of climate-related shocks.

The Moody’s report notes that in particular, the country is exposed to hurricanes that have the potential to cause flooding and damages to infrastructure due to geographic location and cites “a history of substantial economic losses from major hurricanes, such as Hurricane Ivan in 2004”.

The report also references rising sea levels as posing a threat to the Cayman Islands' low-lying coastal areas and critical infrastructure.

However, the Moody’s report observed that “The Cayman Islands' exposure to climate shocks is partially mitigated by high building standards and widespread insurance coverage. Most properties are insured, and building code enforcement was strengthened over the past two decades.”

The rating agency judged Cayman as having low exposure to social risks across most categories, due to comparatively strong education results as well as a strong economy that supports low unemployment levels and provides access to basic services and healthcare that compares well with other countries worldwide.

Minister Anglin observed that while the rating agency’s rationale for the reaffirmation of the Islands’ Aa3 rating and stable economic outlook is good news and reason for optimism regarding continued economic growth and stability, the Government must guard against complacency.

He said, “This latest evaluation from Moody’s reflects confidence in our country’s economic, fiscal and institutional strengths. However, it also underscores our responsibility to ensure that these accomplishments are maintained as a solid foundation to build upon. We must remain committed to keeping our debt ratio low, maintaining compliance with the FFR, diversifying and growing our economy, protecting our financial services sector, and mitigating the potential risks posed by hurricanes, climate change and other weather-related disasters.”

Premier Hon. Andre Ebanks said, “The Moody’s report reaffirming the Cayman Islands’ Aa3 rating is testament to our Islands’ longstanding social and political stability, steady economic growth, and overall sound fiscal policy. The report also underscores the key importance of our financial services industry to our Islands, both in terms providing Government revenue as well as driving the growth of our economy. While encouraging and certainly a sign that we remain on the right track, the report reminds us that we can take nothing for granted. Currently, our government is keenly focused on fiscal prudence to reduce, as much as feasible, projected 2025 deficits while preparing a solid 26/27 budget package. Cayman must now maintain the strengths which earned us the Moody’s Aa3 rating, though guarding against future risks and always looking to diversify and grow in new directions, tapping into the innovation and resilience that we have demonstrated since our seafaring heritage to our present global centre of excellence.”

The 24 June 2025 rating action report by Moody’s can be found in full, to Moody’s subscribers, at www.moodys.com.