DUBAI, June 7 Standard & Poor's downgraded
Qatar's debt on Wednesday as the country's riyal currency fell
to an 11-year low amid signs that portfolio investment funds
were flowing out because of Doha's diplomatic rift with other
Gulf Arab states.
S&P cut its long-term rating of Qatar by one notch to AA-
from AA and put the rating on CreditWatch with negative
implications, meaning there was a significant chance of a
The rating agency said Qatar's economy could suffer severely
from the decision on Monday of Saudi Arabia, the United Arab
Emirates, Egypt and Bahrain to cut diplomatic and transport ties
with Doha. They accused it of supporting terrorism, a charge
"We expect that economic growth will slow, not just through
reduced regional trade, but as corporate profitability is
damaged because regional demand is cut off, investment is
hampered, and investment confidence wanes," S&P said.
Another major rating agency, Moody's, assesses Qatar at Aa3,
which is equal to S&P's new rating. Fitch Ratings puts Qatar at
The U.S. dollar was bid as high as 3.6526 riyals in
the spot market on Wednesday, its highest level since July 2005,
according to Thomson Reuters data. The riyal is pegged at 3.64
to the dollar by the central bank, which only allows small
fluctuations around this level.
Qatar's stock index has tumbled 9.7 percent over the
past three days, with high trading volumes suggesting some Gulf
and international investors are bailing out of the market.
(Reporting by Andrew Torchia, editing by Larry King)