Standard & Poor’s said on Friday it could cut Pakistan’s credit rating if there was more turmoil in the country after the assassination of opposition leader Benazir Bhutto.

The assassination itself would not result in a ratings cut because they were already negative, reflecting that kind of political risk, US agency S&P said.

“However, a further weakening of Pakistan’s institutions, in conjunction with rising levels of violence and disorder, and the postponement of the January 8 elections, would lead to a rating downgrade,” S&P said.

Bhutto, 54, a two-time former prime minister, was shot in the neck by her attacker before he blew himself up at a political rally in Rawalpindi.

S&P said a prolonged political stalemate or social disorder would make Pakistan’s rating vulnerable. Investment into its economy and stock market would likely decline and the government could find it more difficult to refinance its borrowings, the agency said.

Any escalation in violence and wide-scale social upheaval could hit the operation of the government, it said.

S&P and another credit rating agency, Moody’s, downgraded Pakistan’s debt outlook to negative from stable after President Pervez Musharraf imposed a state of emergency in November.

Pakistan had experienced a boom after Musharraf seized power in a coup in 1999, with government figures recording 2006 economic growth of seven per cent, one of the fastest rates in the world.

Foreign investment was around $10 billion for the past year, much of it from Arab nations and the US.

Sovereign credit ratings reflect S&P’s opinion on the future ability and willingness of governments to service their commercial financial obligations.