Bahrain Telecommunications Co.’s
bonds declined, pushing the yields up the most in three months,
after Standard Poor’s said the phone operator’s rating may be
cut to junk.

The yield on the 4.25 percent, $650 million bonds maturing
in May 2020 jumped 36 basis points, the most since June 24, to
6.18 percent at 2:11 p.m. in Manama, the capital of Bahrain. The
company known as Batelco sold the bonds in April to fund the
purchase of Cable Wireless Communications Plc (CWC)’s Monaco and
islands businesses. SP placed Batelco’s BBB- rating, the lowest
investment grade, on credit-watch negative.

Batelco is “suffering a greater loss of market share and
reduction in margins than we anticipated,” SP analysts, led by
London-based Hina Shoeb, wrote in a research note today.
“Higher market competitiveness suggests to us that the
importance of Batelco’s role in Bahrain as a provider of key
communications infrastructure may be decreasing.”

The state-controlled company in December said it will buy
CWC’s business for $680 million as it sought to diversify from
the home market. Batelco reported a 22 percent drop in first-half profit due to expenses linked to the acquisition and
related financing.

To contact the reporter on this story:
Shaji Mathew in Dubai at
shajimathew@bloomberg.net

To contact the editor responsible for this story:
Shaji Mathew at
shajimathew@bloomberg.net