Bahrain Mirror: The government of Bahrain's slow fiscal response to past declines in oil prices has led to a large and growing stock of government debt, and gross international reserves are low and volatile, according to Standard & Poor's (S&P) report.

"As a result, we are affirming our ‘B+/B' ratings on Bahrain with the outlook is stable."

"Government access to international capital markets has proven crucial for replenishing reserves, and we expect financial support for Bahrain's exchange rate arrangement from neighboring sovereigns would be forthcoming, if needed," said S&P

S&P stated the stable outlook reflects the balance between the risk that the central bank would be unable to meet a surge in demand for foreign currency over the next 12 months and potential financial support from neighboring sovereigns.

The report said that Bahrain has a 23% chance of default in the next five years, even as oil being now around $80, but not easing worries about Bahrain.

In March, the government paid a big premium to sell $1 billion of Islamic bonds abroad, causing yields on its existing debt to spike.

Zeina Rizk, director of fixed income asset management at Dubai's Arqaam Capital, told Reuters that Bahrain could count on financial aid if needed from Saudi Arabia.

The central bank's net foreign assets hit a seven-month low of $1.41 billion in March, about 31 days' worth of imports.

Arabic Version