The cost of insuring against a default by Bahrain surpassed Lebanon for the first time since July 2009 as officials declared a state of emergency and Fitch Ratings lowered the Persian Gulf nation’s credit rating.
Bahrain’s five-year default swaps surged 44 basis points yesterday to 359.37 while contracts for Lebanon, whose debt carries a lower credit rating, climbed 4 basis points to 359.17. Bahrain’s swaps have increased the second most in the world this year after Pakistan, according to CMA prices in London.
Fitch lowered its rating on Bahrain’s foreign debt two levels yesterday and said another downgrade is possible. Bond yields and credit risk of governments in the Middle East surged this year as popular uprisings toppled leaders in Tunisia and Egypt. Iran’s government issued a statement condemning the “meddling into Bahrain’s internal affairs” as troops from the six-member Gulf Cooperation Council arrived to bolster security.
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