Given that Aruba topped the list of countries that S&P deemed most vulnerable to a tourism shock, it does not come as a surprise that Aruba's rating was downgraded. Furthermore, the first question ratings agencies always ask is how the Dutch Kingdom would react to support Aruba in a case of an adverse shock. The current hesitance of the Dutch Kingdom to take bold steps to support Aruba is likely a factor that contributes to the pessimistic outlook.
What does this mean?
With the new rating, it becomes increasingly expensive for the government to borrow and effectively warns potential investors that purchasing Aruban debt is a risky proposition. It also means the government is now more than ever dependent on the Dutch Kingdom for financing. It will find it very challenging to roll over existing bonds and obtain new external loans on its own.
Read the report HERE