Bahrain credit rating downgraded on political risk

Standard and Poor's said Monday it was downgrading Bahrain's credit rating by one notch and could lower it further given the high level of political risk following anti-government protests. S&P said Bahrain's sovereign ratings were cut to 'A-/A-2' and put on CreditWatch Negative, meaning they could be downgraded further in view of the political risk in the oil-rich Gulf state. "We have reassessed political risk in Bahrain and believe that the demonstrations of the past month will persist," S&P said. "The rating actions reflect our reappraisal of political risks in Bahrain," it said, adding that the protests will continue "despite the government's use of force to clear the protesters from central Manama." It noted that the protestors are mainly from the Shia community, which accounts for two-thirds of the population which is "looking for higher social transfers or subsidies and increased political participation." The government has increased spending as a result and higher oil prices should cover the higher costs, it added. However, "we expect discussions on political reforms to be more protracted than those focused on improving the social safety net," it said. On Monday, protesters carrying food and tents poured into Manama's Pearl Square, intensifying their calls for an end to the Sunni Al-Khalifa dynasty that has ruled the strategic Gulf kingdom for centuries. The mainly-Shiite protesters have called a massive demonstration for Tuesday in the hope that tens of thousands of people will converge on Pearl Square. Those already there have vowed not to leave until their demands are met. The heir to Bahrain's throne, Crown Prince Salman, has been tasked by his father, King Hamad bin Issa al-Khalifa, with launching a wide-reaching dialogue with the opposition. But emboldened by Arab uprisings which have toppled the strongmen of Tunisia and Egypt since last month, the opposition has raised the stakes, demanding a "real constitutional monarchy" and the government's resignation.