Libya and Bahrain credit ratings cut

Credit rating agencies have downgraded Libya and Bahrain’s sovereign ratings as pro-democracy protests across the countries continued.

As Libya’s violent crackdown on protestors continued leaving president Muammar Gaddafi’s regime looking increasingly uncertain, Fitch said it would downgrade the country’s long-term foreign and local currency issuer default ratings from BBB+to BBB.

Bahrain, which has struggled to contain pro-democracy campaigners but has pulled back from the violence seen last week, had its long-term rating downgraded to A- from A and its short-term rating downgraded to A-2 by Standard & Poor’s.

Fitch said in a statement that Libya could be downgraded further as a result of the escalating violence.

“Political reforms and/or outright regime change is also unlikely to be smooth, given the absence of a mechanism to guide any transition,” it said.

S&P said the downgrade of Bahrain was as a result of political turmoil.

The political protests have forced its crown prince, Salman bin Hamad Al Khalifa, to cancel next month’s Formula One Grand Prix as it focuses on restoring order and answering protestors’ demands for democratic concessions.