By Staff writer
Ratings agency takes action on state-backed companies following downgrade of Bahrain's ratings last week
Fitch Ratings hasn Monday downgraded the long-term issuer default ratings of Bahrain Telecommunications Company (Batelco) and Bahrain Mumtalakat Holding Company (Mumtalakat) to 'BB+' from 'BBB-'.
The ratings agency said in a statement that the outlooks for the state-backed companies are both stable.
The rating actions follow the downgrade last week of Bahrain's long-term foreign currency issuer default rating to 'BB+' from 'BBB-' and long-term local currency IDR to 'BB+' from 'BBB', becoming the latest agency to move its ratings on the Gulf nation into junk territory as oil prices remain weak.
Fitch said that lower oil prices are causing a "marked deterioration" in Bahrain's fiscal position.
"There is progress in fiscal consolidation, but not a clear path towards reaching a more sustainable position," the ratings agency said.
Both Batelco and Mumtalakat are government-linked entities and their ratings are constrained by and equalised with Bahrain's rating, respectively, Fitch added.
In May, Batelco posted a 33 percent fall in first-quarter profit as its subscriber base and revenue both declined.
Batelco made a net profit of 9.6 million Bahraini dinars ($25.46 million) in the three months to March 31, it said in a statement.
Bahraini sovereign fund Mumtalakat in May posted a 68.7 percent drop in 2015 net profit, as the state-owned investor cited impairment losses for the decline.
Net profit in 2015 was $76.3 million against $243.6 million in the previous year, Mumtalakat said.