Mubasher: Moody's Investors Service has downgraded the Government of Bahrain's long-term issuer ratings to B2 from B1 and maintained the negative outlook.

The research firm has attributed the rating downgrade to a further rise in Bahrain's external and government liquidity risks to particularly elevated levels, constraining access to market financing to a greater extent than Moody's previously envisaged.

The Bahrini government's gross borrowing needs remain very high with low foreign exchange reserves despite an increase in oil prices to its highest level in more than three years, the report stated.

Meanwhile, heightened external and government liquidity pressures have not prompted the authorities to accelerate the implementation of fiscal reforms, which Moody's expects to remain very slow.