Bahrain – Ratings Lowered; Outlook Revised to Stable

3 April 2026

Rating Action

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has lowered Bahrain’s Long-Term Foreign Currency Rating (LT FCR) and LT Local Currency Rating (LT LCR) to ‘B’ from ‘B+’. At the same time, CI Ratings has affirmed the sovereign’s Short-Term FCR (ST FCR) and ST LCR at ‘B’. The Outlook for the ratings has been revised to Stable from Negative.

Rating Drivers

The downgrade reflects the ongoing deterioration in the public finances, with the budget deficit and government debt burden already at very high levels and expected to increase further this year. Fiscal consolidation efforts have so far been limited, and pressure on the public finances is increasing owing to the US-Israel war with Iran. The downgrade also reflects rising refinancing risks due to the government’s large gross financing needs and dependence on cross-border funding, which exposes the sovereign to shifts in investor sentiment and global…