Bangkok - Standard & Poor's Ratings Services on Monday downgraded its outlook on Thailand's sovereign credit from stable to "negative," in response to Bangkok's two airports being closed down by anti-government protestors for almost a week.

"The recent occupation of the two airports in Bangkok by anti-government protestors has increased the risks to sovereign creditworthiness," said Standard & Poor's Singapore-based credit analyst Kim Eng Tan.

Tan said the closure of the airports had caused serious disruption to the economy and "raises the possibility of widespread violence markedly."

The anti-government People's Alliance for Democracy (PAD) last week raided and shut down Bangkok's two international class airports - Suvarnabhumi International and Don Mueang - as part of their bid to bring down the administration of Thai Prime Minister Somchai Wongsawat.

Somchai has placed the two facilities under emergency decree and called on the police to clear the airports of the PAD protestors but authorities failed to act over the weekend.

The police are fearful that a bloody crackdown on the PAD would subject them to public criticism, and have hesitated to heed Somchai's command because he may be disqualified as prime minister within days, political observers noted.

Meanwhile, both airports remained closed to air traffic on Monday, costing the country an estimated 3 billion baht (86 million dollars) in undelivered exports and untold millions in damage to the country's tourism sector, the leading foreign exchange earner.

Thailand's political risks have risen since 2006 but, until recently, were not judged to have a material impact on sovereign credit fundamentals, the S&P said in a press statement released in Bangkok.

Despite a coup in 2006, an incompetent military-appointed government in 2007, and political upheaval in 2008, Thailand's exports have performed well throughout, until October when they started to feel the impact of the financial meltdown in the US and Europe.

Foreign exchange reserves have been maintained at a relatively strong level of 105 billion dollars, compared with projected nominal GDP of about 280 billion dollars in
2008, noted S&P.

The rating agency's negative outlook on Thailand reflects its expectations that recent events have damaged medium-term economic growth prospects in the country amid fears of a heightened risk of widespread violence.

"The sovereign ratings could be lowered if economic performance weakens sharply as a result, causing government finance to deteriorate seriously or banks' asset quality to worsen markedly," said Tan.

"On the other hand, the outlook could return to stable if political divisions in the country could be resolved peacefully in a sustained manner." (dpa)