Fitch downgrades Bahrain

Fitch Ratings said it downgraded Bahrain’s long-term foreign-currency issuer default rating to BB+ from BBB- and long-term local-currency issuer default rating to BB+ from BBB.

The outlook is stable.

The ratings on Bahrain’s senior unsecured foreign- and local-currency bonds were downgraded to BB+ from BBB- and BBB, respectively, Fitch said.

The country ceiling was affirmed at BBB+ and the short-term foreign-currency issuer default rating was downgraded to B from F3.

The downgrades are due to lower oil prices, which are causing a marked deterioration in Bahrain’s fiscal position, Fitch explained.

There is progress in fiscal consolidation, but not a clear path toward reaching a more sustainable position, the agency said.

Fitch said it expects general government debt to rise to nearly 80% of GDP in 2016 from about 62% of GDP in 2015, well above the previous ratings standards.

Debt service is an increasing burden on the state budget, as well, and the agency said it expects it to rise to about 41% of revenue in 2016 and 55% in 2017, from 30% in 2015.

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