Jersey and Guernsey's credit ratings remain unchanged

Both Jersey and Guernsey’s credit ratings issued by Standard & Poor’s are unchanged at AA-/A-1+.

In its latest review, Standard & Poor’s (S&P) confirmed that the long and short-term sovereign credit ratings are unchanged and the outlook for Jersey remains stable.

What is the S&P rating? It is a credit score that describes the general creditworthiness of an entity (company, city, or country that issues debt). S&P rates how likely debt will be repaid from the entity in question. The ratings are for informational purposes only – they are not investment recommendations, nor do they predict the probability of default.

The review is part of the cyclical six-monthly assessment process and in its report S&P notes that its ratings are based on Jersey’s “strong and flexible institutions, wealthy economy and considerable fiscal buffers”.

It also projects that Jersey’s economy will recover by 3.2% in gross value added (GVA) in 2021 as the vaccination programme is rolled out and activity that has been paused restarts.

Guernsey’s economy is predicted to post a strong recovery in real GDP of 4.8% in 2021. It comments that the government deficit peaked last year at only half of what was previously forecast. The Bailiwick’s response to COVID-19 is factored into the ratings decision, which notes how much of the economy was able to return to normal trading in the middle of 2020.

But S&P also points to uncertainties in the future, not only relating to the pandemic but also in the future relationship between the UK and EU following the end of the transition period.

Jersey’s Minister for Treasury and Resources, Deputy Susie Pinel, said: “We are pleased that our credit ratings remain unchanged, and that S&P recognises the value of Jersey’s policies, aimed at helping economic activity to recover. We are, however, very aware that in responding to the current health emergency and the impact this has had on our economy, we will be running deficits over the next few years, although these deficits will be offset by returns on our significant assets.”

Guernsey’s Deputy Mark Helyar, the Treasury lead for the Policy & Resources Committee said: “This ratings decision reflects just how well our community has handled its response to COVID-19. Being able to remove our lockdown restrictions and return to a relatively ‘normal’ life within the Bailiwick has helped many sectors and minimised the impact on the Island’s finances. We cannot be complacent and the challenges for our public finances go beyond dealing with the pandemic, but it’s right that our relatively good economic position is recognised.”