S&P downgrades Qatar long-term credit rating

CAIRO – 7 June, 2017: Global credit rating agency Standard and Poor lowered Wednesday Qatar's long-term rating from 'AA' to 'AA-' and placed the rating on CreditWatch with negative implications, two days after six other Arab states severed diplomatic ties with Doha.

Earlier on Monday, Saudi Arabia, the United Arab Emirates, Bahrain, Egypt, Libya, and Yemen announced they cut diplomatic ties with Doha over accusations that the Gulf state is backing terrorist groups and financing terrorist activities.

"We believe this will exacerbate Qatar's external vulnerabilities and could put pressure on economic growth and fiscal metrics," S&P said in a report.

The rating agency affirmed Qatar's 'A-1+' short-term rating.

"The negative CreditWatch encompasses numerous downside risks to the rating as a consequence of recent events, reflecting that we could lower the ratings if domestic political risks were to substantially increase or if government indebtedness increases materially quicker than we currently expect," it added.

S&P further noted that it could also lower the ratings if its assessment of contingent liabilities from the banking system or the government's related entities increased, or if Qatar's external financing lines were withdrawn.