Moody’s, one of the big three global credit rating agencies, has downgraded the outlook of the credit worthiness of the Isle of Man Government from “stable” to “negative”, while maintaining its senior unsecured ratings at Aa3. Despite the forecast downgrade from “stable” to “negative”, the ratings agency continues to rate the Government as a high quality issuer of debt and very low credit risk.
On the afternoon of 26 October, Moody’s held a rating committee to consider the rating of the Isle of Man Government. This committee was held subsequent to Moody’s recent equivalent change in the outlook of United Kingdom Government to negative from stable. The downgrade in the Isle of Man outlook is the same as the downgrade in the UK outlook, and was substantially caused by issues in the United Kingdom.
Moody’s explained the forecast downgrade:
The driver of the decision to change the outlook to negative from stable is the longstanding close and material institutional, economic and financial linkages between the UK and the IoM such that the UK’s sovereign credit trend continues to have a significant impact on the IoM’s credit profile. As a result, the credit challenges facing the UK ? heightened unpredictability in policy making as well as higher borrowing and high inflation ? will have negative consequences for the IoM’s own creditworthiness. Therefore, at the current rating level, a deterioration in the UK’s credit profile, such as that reflected in the 21 October 2022 change in the outlook on the UK’s rating to negative, also affects the IoM’s credit profile.
Rating Action: Moody’s changes the outlook on the Isle of Man to negative; affirms Aa3 ratings
Moody’s made the announcement in a globally-distributed press release on Friday 28 October. No Isle of Man media outlet has yet reported the news.