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S&P downgrades Bahrain
Standard & Poor's said it lowered the long- and short-term sovereign credit ratings on the Kingdom of Bahrain to A-/A-2 from A/A-1 and placed them on CreditWatch with negative implications.
The agency also said it lowered the ratings on the Central Bank of Bahrain and Bahrain Mumtalakat Holding Co., the sovereign wealth fund, to A-/A-2 from A/A-1 and also placed them on CreditWatch negative.
The transfer and convertibility assessment on Bahrain also was changed to A from AA-.
The ratings reflect a reappraisal of political risks in Bahrain, S&P said.
The agency said it expects political demonstrations to persist, despite the government's use of force to clear the protesters from central Manama, the agency said.
The protesters are looking for higher social transfers or subsidies and increased political participation in the government, S&P said.
The government also has increased social spending, which was in excess of that contained in its 2011 budget, the agency said. But projected higher oil prices and higher oil production volumes should help to offset this new spending, S&P added.
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