S&P has assigned a ‘long term Issuer Default Rating of AA+, with a stable outlook’. In addition, Jersey has been assigned the highest level S&P ‘short-term rating of A-1+’. 

The credit rating is needed before the States is able to proceed with the borrowing proposed in the Budget 2014 for £250 million investment in housing over the next 10 years.

Treasury and Resources Minister, Senator Ozouf said: “Obtaining this exceptionally high quality credit rating is very important and positive for Jersey. It underpins our strong international reputation and provides the Government with the opportunity to issue a Sterling Rated Bond at competitive interest costs as a method of financing our future housing needs.

“The AA+ rating demonstrates our high level of credit quality and the ‘Stable Outlook’ element of the rating provides certainty and confidence in our future. Undertaking the ratings process is itself part of our approach to prudent financial management of the States balance sheet, which includes meeting any future financing needs in the most cost effective way.”

In its initial report, S&P noted: “Broad community and political support for prudent fiscal policies have resulted in balanced budgets on average over the past 10 years, as well as the accumulation of assets that can be drawn down to support growth during periods of weakness–such as the past five years.”

“While the financial services sector poses risks, these are partly ameliorated by Jersey’s high income; strong system liquidity and capital; the same lending and underwriting standards as the (mostly UK) parent banks; a funded banking sector depositors' compensation scheme (of up to £50,000 paid to depositors, with a total scheme cost capped at £100 million about 2.7% of GDP); and the sector’s role in providing offshore banking services to clients of U.K. banks. We do not see immediate risks to the sector nor do we believe it is likely that Jersey's government would be called upon to support an ailing institution, if required.”

“The stable outlook reflects our view of Jersey’s high wealth and its strong public policy settings and government finances.” 

Ernst & Young’s (EY) capital and debt advisory team has been working with the Treasury to assess external funding options for the Government. As part of this work, EY advised on a credit ratings process with S&P, which was supported by the Financial Services External Relations Advisory Group (FERAG) and the Council of Ministers.

Read more: Jersey Finance welcomes awarding of AA+ rating to Jersey