Thursday, Fitch Ratings downgraded Thailand's long-term foreign currency Issuer Default Rating or IDR to 'BBB' from 'BBB+', and the long-term local currency IDR to 'A minus' from 'A'. The firm however revised the outlook on the ratings to stable from negative.

At the same time, Fitch also lowered the short-term foreign currency IDR to 'F3' from 'F2', and the country ceiling to 'BBB+' from 'A minus'.

Fitch said the downgrade in the ratings reflects the worsening of the sovereign worthiness, owing to the inability of successive government to resolve civil unrest, which is threatening to prolong an already extended period of political unrest.

Associate Director of Fitch Vincent Ho said, The cumulative effect of repeated episodes of political disorder is a structural weakening of Thai governance, undermining the authority of the state and the credibility of the country's political leadership.

However, on a more positive note, Fitch said Thailand's sovereign ratings were still supported by a sound fiscal position and strong external finances.

The general government balance and debt/GDP ratio have been consistently better than the 'BBB' peer group median in recent years. Net external credit/GDP, including the public and private sectors, is by far the largest of any 'BBB'-rated sovereign and the sovereign's net external credit position exceeds US$90 billion, Fitch said.

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