S&P Global Ratings on Wednesday downgraded its long-term rating on Qatar to AA-minus from AA and said it is keeping it on CreditWatch negative, meaning it could downgrade the sovereign again in the near term. The move comes after governments including Saudi Arabia, United Arab Emirates, Bahrain, Egypt, Libya, and Yemen cut diplomatic, trade and transport links with Qatar. “We believe this will exacerbate Qatar’s external vulnerabilities and could put pressure on economic growth and fiscal metrics,” the ratings agency said in a statement. The negative CreditWatch reflects the risks associated with the diplomatic spat and S&P would downgrade again if those increase or the government takes on more debt more quickly than expected. “We could also lower the ratings if our assessment of contingent liabilities from the banking system or the government’s related entities were to increase, or if Qatar’s external financing lines were withdrawn,” said the statement.
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