Mubasher: Moody's Investors Service on Saturday downgraded its long-term issuer ratings for Bahrain and the Sultanate of Oman and gave negative and stable outlooks, respectively.

The international ratings agency revised its long-term issuer ratings for the Bahraini government to Ba2 from Ba1 and assigned a negative outlook.

The credit profile for Bahrain's government "will continue to weaken materially in the coming years, despite its fiscal consolidation efforts," Moody's said in its statement, adding that it expects Bahrain's government "debt burden and debt affordability to deteriorate significantly over the coming two to three years."

Meanwhile, the negative outlook given to Bahrain reflects "increased downside risks to the rating, which manifest themselves in heightened government liquidity and external liquidity risks." While Bahrain has benefited from the support of neighbouring countries during stressful times in the past, such support lacks clarity both in its form and timeliness.

As for Oman, Moody's said it downgraded the government long-term issuer ratings to Baa1 from A3 because despite the notable fiscal consolidation efforts undertaken by the Omani government, "a protracted period of low oil prices will negatively affect Oman's sovereign credit profile beyond the level Moody's anticipated in February when it downgraded the rating to A3 from A1."

On the other hand, the stable outlook mirrors several strengths, which Moody's believes will counterbalance potential downside risks and keep Oman's credit profile compatible with a Baa1 rating over the coming years. Such strengths include low levels of government debt and fiscal buffers.

Moody's also lowered its long-term foreign-currency bond ceiling for the Sultanate to A3 from A2 as well as its long-term foreign-currency deposit ceiling to Baa1 from A3. In addition, the ratings agency lowered the short-term foreign-currency bond ceiling to Prime-2 from Prime-1, while the short-term foreign-currency deposit ceiling remains at Prime-2. Oman's long-term local-currency country risk ceilings were lowered to A3 from A2.

Saturday's rating actions for Bahrain and Oman conclude the review for downgrade which Moody's initiated on 4 March 2016, according to the statements.