International ratings agency Moody's on Monday downgraded the local and foreign currency government bond ratings of Bahrain to A3 from A2 with a stable outlook. The ratings action was based on a "gradual but significant rise in the breakeven oil price in the Bahraini budget over recent years," Moody's said in a statement.
"This, together with a relatively modest level of official financial assets, has led to a divergence between the government's fiscal flexibility and that of rating peers," it said. Moody's also voiced "some concerns" about the performance of Bahrain's financial sector, which is large in relation to the government's resources.
