S&P cuts Jordan sovereign credit rating to BB-

Standard & Poor’s (S&P) ratings agency has downgraded Jordan’s sovereign credit rating by one notch to BB-minus from BB with a negative outlook.

“The downgrade results from our view of Jordan’s weakened external and fiscal profiles in the wake of reduced foreign grants and weaker terms of trade in 2011 and 2012,” said S&P in a statement on Monday, AFP reported.

The rating agency noted that foreign grants fell to 1.5 percent of gross domestic product — the lowest in over a decade — from 5.9 percent in 2011.

“High oil prices in 2012 made things worse by further increasing the country’s energy import bill, while the cheaper Egyptian gas supply remained largely disrupted,” it added.

The firm also said the negative outlook reflects the potential for downgrade over the next year if “adverse developments, particularly emanating from the conflict in Syria,” again significantly raising Jordan’s financing needs.

“While external pressures may be dissipating, Jordan remains vulnerable to factors that could again worsen external and fiscal balance sheets,” said S&P.

Rival ratings agency Moody’s has Jordan rated one notch higher at Ba2. That rating has been on negative outlook since February 2011, although it is not currently on watch for a downgrade.