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Fitch places Qatar on watch negative


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Fitch places Qatar on watch negative

Fitch Ratings on June 12 placed Qatar's AA long-term and F1+ short-term foreign- and local-currency issuer default ratings on rating watch negative.

Saudi Arabia, the United Arab Emirates, Bahrain, Egypt, Libya and Yemen recently severed diplomatic and logistical ties with Qatar, accusing Qatar of financing terrorist activity. While some discussions have taken place to resolve the crisis, Fitch expects the issue to sustain and negatively affect Qatar's economy and its credit metrics.

Qatar is likely to be able to handle strains on supplies of food and other goods, but at a cost. Meanwhile, the country could contain the impact of an outright ban on financial relations with Qatar, which could lead to disruptions in the Qatari financial industry, the rating agency said.

However, prolonged isolation of the country could have serious implications for the country's business environment and undermine the business model of Qatari companies, potentially requiring costly bailouts, Fitch said.

S&P Global Ratings on June 7 lowered Qatar's long-term rating to AA- from AA and placed it on CreditWatch with negative implications.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.