AMMAN, Jordan

Ratings agencies Moody’s and Standard & Poor’s yesterday downgraded a host of ratings for Jordan, a move that underscored how massive anti-government protests in Egypt have fueled worries about the economies of other Arab countries.

Moody’s said it revised Jordan’s Ba2 foreign currency government bond outlook to negative from stable, and warned that the sovereign rating may be lowered if “there were disruptive political turmoil that threatened a structural weakening of Jordan’s credit fundamentals relative to rating peers.”

It also knocked the government’s local currency bond rating out of investment-grade status, lowering it to Ba2 with a negative outlook from Baa3.

Both moves were triggered by concerns that fiscal and economic risks have mounted following protests in Tunisia that toppled the country’s leader and broader ones in Egypt seeking to oust President Hosni Mubarak.

The Egypt protests have been particularly worrisome for investors as they roiled the Arab world’s most populous nation and one considered for much of Mubarak’s nearly 30-year tenure to be the most stable in a volatile region.

An official at the Central Bank of Jordan said he was “surprised” by Moody’s negative outlook. The official, who spoke on condition of anonymity because he was not authorised to comment to the media, declined to provide other details aside from saying that the government is reviewing Moody’s report and will respond later.

Moody’s was not alone in raising concerns about a potential spillover from the unrest that has roiled the region for more than two weeks. Jordan has seen smaller-scale demonstrations that led King Abdullah II to fire his Cabinet in a bid to defuse the tension.

Fellow ratings agency Standard & Poor’s lowered its long- and short-term local currency ratings on Jordan to BB+/B from BBB-/A-3, and revised the outlook on long-term foreign currency and local currency ratings to negative from stable.

“We believe ongoing turmoil will lower Jordan’s medium-term growth prospects and damage its public finances,” S&P credit analyst Luc Marchand said, adding that the continuing turmoil in the region is likely to result in lower economic growth and fiscal revenue expectations.

The agency affirmed its BB/B long-term and short-term foreign currency ratings for Jordan.

The desert kingdom relies heavily on foreign investment, tourism and worker remittances to fuel economic growth and generate revenue for the government. But it also plays host to hundreds of thousands of Palestinian and Iraqi refugees, burdening a system that is already struggling to cope with a record $2 billion budget deficit this fiscal year.