Moody’s downgrades Bahrain to Ba2

Moody's Investors Service said it downgraded Bahrain's long-term issuer ratings to Ba2 from Ba1 and assigned a negative outlook.

The action concludes the review for downgrade initiated on March 4.

Moody’s said the main driver for the downgrade is its view that the credit profile of the Bahraini government will continue to weaken materially in the coming years, despite its fiscal consolidation efforts. In particular, the agency expects Bahrain's government debt burden and debt affordability to deteriorate significantly over the coming two to three years.

The negative outlook reflects increased downside risks to the rating, which manifest themselves in heightened government liquidity and external liquidity risks. Furthermore, although Bahrain has benefited from the support of neighboring countries during times of stress in the past, such support at this juncture lacks clarity, both in its form and timeliness, Moody’s said.

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