S&P Global Ratings downgraded Bahrain for the first time since 2017 as the Gulf country’s fiscal position deteriorates and debt levels rise. The sovereign credit rating was cut one level further into junk to B from B+ on Friday, with S&P analysts citing the small island nation’s fiscal struggles along with elevated indebtedness as the main catalysts behind the downgrade.
It now shares similar ratings to Egypt and Kenya. Bahrain’s outlook was changed to stable from negative. Its creditworthiness assessment by S&P is now on par with Moody’s Investors Service and one notch lower than Fitch Ratings. "Bahrain’s debt will continue to rise against the backdrop of softer oil market dynamics and still-wide fiscal deficits,” S&P analysts said. Bahrain, the smallest of the six-nation Gulf Co-operation Council economies, has been grappling with wide budget deficits.
Fitch this year turned its outlook on the Gulf state’s debt to negative, citing elevated indebtedness levels. In 2018, Bahrain received a $10bn aid package from states including Saudi Arabia and the United Arab Emirates. Under the assistance plan, the country said it was committed to keeping spending under control and envisaged a balanced budget by 2022.
S&P said it expects the Gulf Cooperation Council states "will continue extending political, economic, and financial support to Bahrain if needed.” The country’s also rushed to bond markets this year, raising billions of dollars as a drop in Brent crude prices weighs further on its economy. "Bahrain’s economy and budget remain susceptible to oil price volatility, despite hydrocarbons representing only 15% of GDP,” according to S&P.
It now shares similar ratings to Egypt and Kenya. Bahrain’s outlook was changed to stable from negative. Its creditworthiness assessment by S&P is now on par with Moody’s Investors Service and one notch lower than Fitch Ratings. "Bahrain’s debt will continue to rise against the backdrop of softer oil market dynamics and still-wide fiscal deficits,” S&P analysts said. Bahrain, the smallest of the six-nation Gulf Co-operation Council economies, has been grappling with wide budget deficits.
Fitch this year turned its outlook on the Gulf state’s debt to negative, citing elevated indebtedness levels. In 2018, Bahrain received a $10bn aid package from states including Saudi Arabia and the United Arab Emirates. Under the assistance plan, the country said it was committed to keeping spending under control and envisaged a balanced budget by 2022.
S&P said it expects the Gulf Cooperation Council states "will continue extending political, economic, and financial support to Bahrain if needed.” The country’s also rushed to bond markets this year, raising billions of dollars as a drop in Brent crude prices weighs further on its economy. "Bahrain’s economy and budget remain susceptible to oil price volatility, despite hydrocarbons representing only 15% of GDP,” according to S&P.
November 22, 2025 | 04:49 PM