Ratings agency Moody's on Wednesday placed Bahrain on credit watch over the political unrest in the tiny Gulf state, warning that it will consider downgrading its sovereign debt rating.
"Moody's Investors Service has today placed Bahrain's A3 government bond ratings on review for possible downgrade," the agency said in a statement, while taking the same precautionary measure against its foreign currency bank deposits.
However it added that "barring an extreme outcome to the political unrest, Moody's expects Bahrain's ratings to remain within investment grade," even if they are taken down a notch.
The review will focus on "the degree to which political risk has structurally increased and how significantly the credit fundamentals of Bahrain are threatened relative to rating peers."
On Monday, fellow ratings agency Standard & Poor's dropped Bahrain's rating from A to A-, with a warning that a further downgrade could occur in the months to come.