S&P lowers Qatar's credit rating

Qatar's credit rating was lowered on Wednesday, in the latest fallout from the decision by a group of neighbouring countries to cut diplomatic and trade ties.

The downgrade by the S&P Global agency came as Qatar's currency fell to an 11-year low and its stock market tumbled.

S&P Global reduced the nation's credit rating to AA- from AA and put the nation on a negative watch.

Noting many uncertainties, the agency said it would monitor the situation.

Oil-rich Qatar is being isolated by its neighbours, including Saudi Arabia, Egypt, Bahrain and the United Arab Emirates.

They say Qatar backs militant groups including so-called Islamic State (IS) and al-Qaeda, which Qatar denies.

Qatar diplomatic crisis: What you need to know

The decision has led to suspended flights, concern over food shortages and the supply of construction materials.

"We believe this will exacerbate Qatar's external vulnerabilities and could put pressure on its economic growth and fiscal metrics," S&P said.

S&P said it expects Qatar's economic growth to slow, as regional trade falls and corporate profitability declines in the face of reduced confidence.

It said there had been large "non-resident" deposits in Qatar's banks, and an increase in their lending to the government to fund infrastructure projects.

"In our opinion recent events have have the potential to destabilise these non-resident deposits and provoke an outflow," said S&P.

It said Qatar may need to use Qatar Investment Authority and sovereign wealth fund money, as well as central bank reserves to tackle any big outflow of funds.

Qatar's biggest trade partners are outside the region.

But six states involved in the blockade account for 10% of Qatari exports and 15% of its imports, according to the S&P note.

Another major rating agency, Moody's Investors Service, assesses Qatar at Aa3, which is the equivalent of S&P's new rating. Fitch Ratings puts Qatar at AA.

S&P's next scheduled rating of Qatar is due on 25 August.