On an upswing

Moody’s Investors Service yesterday changed the outlook to stable from negative on the Government of Bahrain’s issuer ratings and affirmed the ratings at B2. The key driver of the outlook change to stable is Moody’s assessment that Bahrain’s government and external liquidity risks have materially reduced, the rating agency said. Financial support and the fiscal consolidation measures including the Fiscal Balance Programme (FBP) will support investors’ confidence and help to reduce the government’s financing needs, it pointed out.

Bahrain’s long-term foreign-currency bond ceiling is unchanged at Ba3. Its long-term foreign-currency bank deposit ceiling is unchanged at B3. The short-term foreign-currency bond and bank deposits ceiling remain unchanged at Not Prime, while the long-term local currency country risk ceilings are unchanged at Ba2. In addition, the long-term foreign-currency bond and bank deposit ceilings for Bahrain - Off Shore Banking Centre remain unchanged at Baa2, while the short-term foreign-currency bond and bank deposit ceilings remain unchanged at Prime-2.

Two months ago, Bahrain announced a $10 billion (26 per cent of 2018 estimated GDP) financial support agreement signed with Saudi Arabia (A1 stable), UAE (Aa2 stable) and Kuwait (Aa2 stable), Moody’s said. Moody’s anticipates that funds from the financial support package will be disbursed during 2018-22 in the form of long-term concessionary loans, more than covering the scheduled external debt payments (principal and interest) of the government (approximately $9.4 billion, including the $750 million sukuk that was repaid in late November 2018).