Bahrain rejects Moody's concerns about financial sector's health

Bahrain's central bank governor has rebutted concerns expressed by ratings agency Moody's Investors Service about Bahrain's financial sector, stressing that the country's retail banks have seen "no major outflows." Discussing Moody's recent move to downgrade Bahrain's sovereign credit rating to Baa1 from A3, Rashid Al Maraj told Dow Jones Newswires and The Wall Street Journal that the Gulf country's economy is sound. He added that its financial resilience is reinforced by the backing of its regional neighbours, most notably Saudi Arabia. Moody's cited the political turmoil and fundamental weaknesses in the country's large banking sector as a motivation for the downgrade. According to the ratings agency, Bahrain is the only GCC member state that "does not have a large sovereign wealth fund of offshore financial assets". But Al Maraj said the country's five-year-old fund is "diversified and well-managed" by members who sit on company boards across the region, with most of its assets in "government investments." "Any downgrade is a matter of concern," Al Maraj said. "We tried to explain to [Moody's] all the econ-omic fundamentals at play in Bahrain." Al Maraj said he expects Bahrain to grow by at least 5 per cent this year. "We've managed to diversify the economy and our sovereign fund is carefully set up to maximise returns on investments," he said. From / Gulf News