‘Highly speculative’ report: ‘Climate change’ a threat to Bermuda’s credit rating
Climate change could put Bermuda at risk of greater economic damage and dent its sovereign credit rating more than many countries and islands.
That is the finding of a speculative report by Standard & Poor’s Ratings Services.
Using direct damage data from Swiss Re, the agency estimated the possible adverse effect of climate change on 38 countries.
It based its measurements on the expectation of a once-in-250-year natural catastrophe event striking, and the impact being exacerbated a further 20 per cent to represent the magnified additional damage expected to be inflicted due to climate change.
Projected out 35 years to 2050, the report suggests the costs associated with a once-in-250-year hurricane would increase Bermuda Government’s debt by 16 per cent of gross domestic product. That assessment jumps a further 8 per cent once the additional damaging impact of climate change is factored in.
Bermuda’s sovereign credit rating would be negatively impacted by 1.48 notches by such a catastrophic hurricane, and by a further 0.79 as a result of the added impact from climate change.
That places Bermuda squarely among countries and islands most likely to feel significant pressure on their rating.
While the report is highly speculative in nature, and is the first such survey undertaken by S&P, its findings give an interesting overview of potential future scenarios.
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