Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's changes outlook on Bahrain's rating to stable, affirms B2 rating

17 Dec 2018

Singapore, December 17, 2018 -- Moody's Investors Service ("Moody's") has today 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, while remaining elevated, have materially reduced following the announcement of a $10 billion financial support package from Bahrain's Gulf Cooperation Council (GCC) neighbors. Financial support and the fiscal consolidation measures (the Fiscal Balance Program, FBP) that are set to accompany it will support investors' confidence and help to reduce the government's financing needs. In turn, this will slow a further weakening in Bahrain's public finances in a way that is consistent with a B2 rating

The affirmation of Bahrain's B2 rating reflects Moody's view that, despite the recent reduction, the sovereign's external vulnerability will remain very high with persistently low foreign exchange reserves. Moreover, Moody's expects that, despite some fiscal consolidation, Bahrain's government debt burden will continue to rise, as political and social considerations will prevent a full implementation of the FBP. These credit challenges are set against Bahrain's key credit strength -- its relatively diversified and dynamic economy.

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 Center remain unchanged at Baa2, while the short-term foreign-currency bond and bank deposit ceilings remain unchanged at Prime-2.

RATINGS RATIONALE

RATIONALE FOR THE CHANGE IN THE OUTLOOK TO STABLE FROM NEGATIVE

GCC FINANCIAL BACKSTOP REDUCES GOVERNMENT AND EXTERNAL LIQUIDTY RIKS

On 4 October 2018, Bahrain announced a $10 billion (26% of 2018 estimated GDP) financial support agreement signed with Saudi Arabia (A1 stable), UAE (Aa2 stable) and Kuwait (Aa2 stable). The package aims to support a set of fiscal reforms -- summarized in the Fiscal Balance Program -- which Bahrain has committed to implement under the agreement.

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). The disbursements will directly support Bahrain's government liquidity position and reduce the risk that the central bank foreign exchange reserves could be rapidly depleted.

Importantly, Moody's estimates that Bahrain will be able to draw on additional extraordinary support from the GCC neighbors to support the stability of its exchange rate peg during the course of the FBP implementation.

Moody's also expects that the presence of the GCC backstop will allow the government and government-related entities to regain access to international capital markets, which had become compromised during much of 2018, further supporting liquidity.

FBP IMPLEMENTATION, ALBEIT LIKELY PARTIAL, WILL SLOW FURTHER WEAKENING OF PUBLIC FINANCES

The fiscal reforms announced by the government as part of the FBP would represent very significant fiscal consolidation. While Moody's expects some implementation hurdles and, as a result, a more gradual fiscal consolidation, some of the measures outlined becoming effective will slow the weakening of Bahrain's fiscal metrics.

The FBP targets a reduction in government spending relative to GDP to 19.5% in four years from an estimated 26.6% in 2018, with an increase in revenue to 19.3% from 17.5%, which would restore budget balance by 2022. The measures include spending cuts from a voluntary retirement scheme for eligible civil servants, more targeted social transfers and increases in water and electricity tariffs, and savings from better spending efficiency and rationalization; on the revenue side, the FBP plans the introduction of a 5% value added tax, a review of existing government fees and services and the repricing of tariffs charged to domestic industrial consumers of natural gas.

Given the challenge of achieving such large and broad fiscal consolidation, and in light of Bahrain's limited track record of implementing significant fiscal tightening, Moody's assumes only a partial implementation of the FBP. While VAT looks likely to be implemented, maintaining some of the planned expenditure cuts over several years will likely be challenging.

Even with a partial implementation, however, Bahrain's fiscal deficit is likely to narrow sufficiently to lower the government's gross borrowing requirements to around 25% of GDP by 2022 from an estimated 35% of GDP in 2017. Government debt is also likely to increase at a much more moderate pace than earlier envisaged. At this stage, Moody's expects government debt to rise to around 95% of GDP in 2022 (including debt owed to the central bank), from 89.4% in 2018, compared to more than 110% of GDP previously projected.

RATIONALE FOR THE RATING AFFIRMATION AT B2

EXTERNAL VULNERABILTY WILL REMAIN VERY HIGH

Moody's expects that Bahrain's external vulnerability will remain very high. While the disbursements from the GCC package will cover all government external debt payments over the next four years, they will not be sufficient to materially increase Bahrain's foreign exchange reserves at the same time.

Moody's expects that reserves will remain in a range that covers only about 1-2 months of imports of goods and services. Although up from the latest levels ($1.4 billion or 0.6 months of import coverage at the end of October 2018), reserves will continue to provide only a very thin buffer to protect the sovereign against potential external shocks, including potential declines in oil prices below Moody's medium-term assumptions.

GOVERNMENT DEBT METRICS WILL CONTINUE TO DETRIORATE, ALBEIT MORE SLOWLY THAN PREVIOUSLY ENVISAGED

Bahrain's fiscal strength will remain very low, although the further weakening in debt metrics will be materially slower than previously anticipated.

Under the assumption of a partial implementation of the FBP, Moody's expects that government debt relative revenues will rise above 430% in 2022 from estimated 408% at the end of 2018. Meanwhile, debt affordability will remain low, with interest payments to revenue rising slightly, to 21% in 2022 from 19% in 2018, and vulnerable to increases in global interest rates, although the concessionary nature of the funding from the GCC support package will mitigate some of this impact.

RELATIVELY DIVERSIFIED ECONOMY SUPPORTS B2 RATING

Bahrain's B2 rating remains supported by the country's relatively diversified and dynamic economy.

Hydrocarbon production accounts for about 15% of nominal GDP in 2018, implying a smaller sensitivity of nominal GDP to fluctuations in oil prices compared to the rest of GCC. Moody's expects that Bahrain's non-oil growth will be around 3% in the next few years, with fiscal consolidation weighing on growth momentum somewhat. Overall GDP growth is likely to average around 2%.

Over the longer term, Bahrain's economic strength will benefit from the new hydrocarbon discovery announced in April 2018, although the boost to growth, as well as export and fiscal revenues starting in 2023, is as yet unknown.

The B2 rating also takes into account the proven commitment of the GCC countries to support Bahrain's financial, economic and social stability, which includes ongoing disbursements from the GCC Development Fund that was set up to fund Bahrain's infrastructure and housing projects. We estimate that at the end of 2018, approximately $5 billion of the available funds (equivalent to 13% of GDP) remain available and the expected disbursements of 2-2.5% of GDP per year will continue support Bahrain's non-oil growth in the next five years.

WHAT COULD CHANGE THE RATING UP

Over time, a more rapid and significant fiscal consolidation than currently expected, that would set the government's debt burden on a stable and eventually declining path, would likely would likely prompt Moody's to upgrade the rating. Effective fiscal consolidation would be reflected in a durable and material reduction of Bahrain's fiscal vulnerability to declines in oil prices as measured by falling fiscal breakeven oil prices.

A sustained rebuilding of the central bank's foreign exchange buffers that would materially decrease external vulnerability risks would also likely lead to an upgrade.

WHAT COULD CHANGE THE RATING DOWN

Moody's would likely downgrade the rating if it became apparent that fiscal consolidation will be materially slower than currently envisaged, potentially threatening the disbursements of GCC support and/or undermining investors' confidence. In this scenario, fiscal metrics would weaken and liquidity and external vulnerability risks would rise again, possibly rapidly.

More generally, protracted delays in disbursements from the GCC that would lead to a further significant erosion of foreign exchange reserves and undermine market confidence in the GCC backstop would also put negative pressure on the rating.

GDP per capita (PPP basis, US$): 49,006 (2017 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 3.3% (2017 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 1.4% (2017 Actual)

Gen. Gov. Financial Balance/GDP: -14.3% (2017 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -4.5% (2017 Actual) (also known as External Balance)

External debt/GDP: 178.9%

Level of economic development: High level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

SUMMARY OF MINUTES FROM RATING COMMITTEE

On 12 December 2018, a rating committee was called to discuss the rating of the Bahrain, Government of. Other views raised included: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutional strength/ framework, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. The issuer's susceptibility to event risks has not materially changed.

The principal methodology used in these ratings was Sovereign Bond Ratings published in November 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

The local market analyst for this rating is is Alexander Perjessy, 971(423)795-48 .

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Martin Petch
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com