By Karen Leigh
Rating agency cuts Bahrain to A- amid ongoing civil unrest in the Gulf state
Poor’s cut Bahrain’s sovereign credit ratings by a further notch on Monday, as
political tensions in the Gulf state remain high.
reduced long-term rating for Bahrain is an A-, the fourth-lowest investment
At the start of the protests last week Moody’s Investor
Services downgraded Bahrain’s credit rating to A3, citing worry over
deterioration in the royal government’s finances.
Though still investment grade, it gave Bahrain the lowest
rank of the six Gulf states.
short-term rating is A-2 and Bahrain’s debt has been placed on credit watch
with negative implications.
“We expect the
demonstrations that have taken place over the past month will persist, despite
the government’s use of force to clear the protesters from central Manama,”
S&P said in a statement.
lower ratings and potential fallout from decreased investment, oil could save
the economy from going into deficits of less than 2 percent of GDP this year
and 2012 if oil prices remain near $100 a barrel, S&P said.
“It is normal
following any political or economic development that the credit rating agencies
would review the ratings," Central Bank Governor Rasheed al-Maraj said in
an emailed statement to Bloomberg, before S&P’s rating change.
"However we believe that the economic fundamentals of the Kingdom of
Bahrain remain strong and that the short term economic and political
developments should not entirely reflect on the review.”
Bahrain’s 10-year dollar bond maturing in 2020 – a solid market indicator –
fell for a 10th day, with the yield climbing 34 basis points to a record 6.96