S&P affirms Bahrain 'B/B' ratings; outlook remains stable

Standard & Poor’s Global Ratings has lowered Bahrain’s long-term and short-term sovereign credit ratings to ‘B’ from a previous higher level, citing ongoing fiscal challenges. The downgrade reflects concerns over the kingdom’s ability to manage its budget deficit, which has widened due to lower oil revenues and increased government spending amid economic headwinds. Despite efforts to diversify the economy and implement fiscal reforms, S&P noted that debt sustainability remains vulnerable to external shocks and subdued growth.

The agency emphasized that Bahrain’s fiscal position is constrained by its reliance on hydrocarbon revenues and limited fiscal buffers, which reduce its capacity to respond to economic downturns. However, S&P affirmed a stable outlook for the ratings, citing the government’s commitment to structural reforms, including public sector efficiency measures and privatization initiatives. These steps, if effectively executed, could help stabilize debt dynamics over the medium term.

The downgrade aligns with recent assessments by other rating agencies, including Fitch Ratings, which also revised Bahrain’s sovereign rating to ‘B’ with a stable outlook in February 2026. Investors are advised to monitor the pace of fiscal consolidation and the effectiveness of economic diversification efforts in determining Bahrain’s credit trajectory.

According to S&P Global Ratings: regulatory article
According to S&P Global Ratings: research update
According to S&P Global Ratings: regulatory article
According to Fitch Ratings: sovereign research