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Mon 4 Jul 2016 03:45 PM

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Fitch downgrades ratings of Bahrain's Batelco, Mumtalakat

Ratings agency takes action on state-backed companies following downgrade of Bahrain's ratings last week

Fitch downgrades ratings of Bahrain's Batelco, Mumtalakat

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.

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