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UPDATE 1-S&P cuts Bahrain rating to 'B+'

(Adds background of recent Moody's assessment)

Dec 1 (Reuters) - S&P Global Ratings on Friday lowered Bahrain's long-term foreign and local currency sovereign credit ratings on Bahrain to 'B+' from 'BB-'.

S&P said the downgrade reflected Bahrain's weak external liquidity and increasing financial risk due to more limited access to international capital market financing.

S&P said its outlook on Bahrain was stable, reflecting an expectation of financial support from neighboring sovereigns, despite the risk of the central bank not meeting a surge in foreign currency demand or tempering the effects of a worsening of investor sentiment, S&P said. ( http://bit.ly/2njsqtP )

In November, Fitch Ratings revised Bahrain's outlook to 'negative' from 'stable'.

The government has yet to identify a clear medium-term strategy to combat high deficits and rising government debt ratio, Fitch said last month.

In September, Moody's had assessed that Qatar and Bahrain were "most exposed" to the diplomatic row in the Middle East which was credit negative for all Gulf Cooperation Council (GCC) states after GCC members launched an economic boycott of Qatar in June.

Last month, some of Bahrain's dollar-denominated bonds fell to their lowest levels since January following Saudi Arabia's anti-graft purge and government turmoil in Lebanon. (Reporting by Kanishka Singh; Editing by Kevin Liffey and Sandra Maler)