(Corrects new Saudi outlook to stable from negative, previous
to negative from stable in 2nd paragraph)
By Marc Jones
LONDON Feb 17 Rating agency Standard & Poor's
downgraded Saudi Arabia, Brazil, Kazakhstan, Bahrain and Oman's
credit ratings on Wednesday, in its second mass cut of large oil
producers in almost exactly a year.
S&P cited the pressures being created by the drop in oil
prices for the moves which included double-notch downgrades of
Saudi Arabia to A- stable from A+ negative and stripping Bahrain
of its investment grade status.
"The decline in oil prices will have a marked and lasting
impact on Saudi Arabia's fiscal and economic indicators given
its high dependence on oil," the ratings agency said in a
The plunge in oil prices since mid-2014 had already brought
a blizzard of downgrades for oil producers, including Saudi
Arabia, Russia, Brazil and Venezuela, where the oil rout has
raised fears of a sovereign default.
The moves were a near repeat of similar co-ordinated cuts
made this time last year. The firm's head of sovereign ratings
in EMEA, Moritz Kraemer, told Reuters last month that another
such move was being considered.
One country that was spared this time was Russia. S&P said
Moscow's fiscal buffers gave it more leeway, though it could
still cut its BB+ rating again if those were eroded faster than
expected or if international sanctions were "significantly"
Brazil was kept on a negative outlook, meaning a roughly
1-in-3 chance of another cut as its rating dropped one notch to
BB from BB+.
However, it was Brazil's political difficulties as much as
the economic pressures from falling oil prices that were cited
for the move.
For the Middle East there is far more intense pressure from
low oil because many currencies, including the Saudi riyal, are
pegged to the dollar, limiting scope for currency weakness that
could stimulate the economy.
Authorities are also having to dig into reserves to keep
spending at levels that support their highly dependent
Like Saudi Arabia, Bahrain saw its rating cut two notches.
Significantly, though, it also lost investment grade as it went
to BB from BBB-.
Oman was lowered two steps as well to BBB- stable from BBB+
negative while Kazakhstan was cut one notch to BBB- from BBB but
left on a negative outlook due to concerns about inflation,
exchange rate pressures and banking sector stability.
(Reporting by Marc Jones; Editing by Ruth Pitchford)