December 14, 2012 / 7:01 PM / in 5 years

UPDATE 1-Moody's downgrades Bahamas credit rating to Baa1

NEW YORK, Dec 14 (Reuters) - Moody’s Investors Service on Friday downgraded its sovereign credit rating for the Bahamas by one notch to Baa1, citing limited economic growth prospects, leaving the Caribbean nation in the lower end of investment grade.

The credit outlook remains negative, Moody’s said in a statement.

“The economy contracted at an average rate of 0.8 percent annually between 2007 and 2011 and Moody’s expect the post-crisis recovery to remain fragile,” the firm said.

“Tourism, offshore financial services, and construction sectors - the main drivers of economic activity - continue to face downside risks, exacerbated by an uncertain recovery in the U.S., the Bahamas’ main tourism market,” Moody’s said.

Standard & Poor’s rates Bahamas one notch lower at BBB with a negative outlook. The island nation is not rated by Fitch Ratings.

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