MANAMA: Following the steep decline in oil prices well below Bahrain’s fiscal break-even level, Moody’s Investors Service has changed the outlook on Bahrain’s sovereign ratings to negative from stable.
These ratings are the country’s A2 local and foreign currency government bond ratings, the A2 country ceiling for foreign currency bank deposits and the Aa3 country ceiling for foreign currency bonds. Bahrain’s country ceiling for local currency bank deposits and country ceiling for local currency bonds remain at Aa2.
Moody’s, in a statement issued yesterday, said the change in outlook was prompted by the steep decline in oil prices well below Bahrain’s fiscal break-even level.
“Compared with similarly rated oil exporters, Bahrain has more limited reserves of liquid financial assets that can be tapped to finance fiscal deficits and ease adjustment. Moreover, Bahrain may not have the resilience to absorb the price shock and avoid impairment to its credit fundamentals relative to global rating peers,” Tristan Cooper, vice president and senior analyst in Moody’s Sovereigns Group, said.
Despite progress toward economic diversification, Moody’s added, Bahrain’s fiscal and external current accounts remain heavily dependent on oil export receipts.
