Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Saudi Arabia - Sovereign ratings affirmed at aa-  Join our daily free Newsletter

MENAFN Press - 27/06/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN Press) 27th June 2014

Saudi Arabia's Sovereign Ratings Affirmed at 'AA-'

RATING ACTION

Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Saudi Arabia's Long-Term Foreign and Local Currency Ratings of 'AA-' and its Short-Term Foreign and Local Currency Ratings of 'A1'. The Outlook for the ratings is 'Stable'.


RATING RATIONALE

Saudi Arabia's credit ratings are underpinned by the prudent management of the country's substantial oil endowment during a prolonged period of high international energy prices. This in turn has resulted in the accumulation of substantial financial reserves to shield the economy from shocks, including oil price volatility.

The budgetary position is in large overall surplus and the government's balance sheet is strong, characterised by sizeable financial assets and minimal debt. CI expects the central government budget surplus to exceed 7% of GDP in 2014 and to be about 4% in 2015, assuming annual average oil prices of USD102 per barrel and USD97 per barrel, respectively. Government financial assets in the form of deposits held with the Saudi Arabian Monetary Authority (SAMA) are expected to approach 65% of GDP in 2014 (60% in 2013), providing a satisfactory fiscal buffer against future adversities.

The balance of payments position is comfortable and official foreign reserves offer substantial protection against external shocks. The current account surplus was about 18% of GDP in 2013 and is expected to remain in surplus over the coming years. Official foreign assets under SAMA's management amounted to USD733 billion at end-March 2014 (equivalent to about 95% of estimated GDP in 2014), and are almost ten times as large as the country's gross external debt stock.

The short-term economic outlook remains broadly favourable. CI expects real output growth to increase by about 4% during 2014-16, underpinned by robust non-oil activity and supported by planned government capital spending and the continuation of double-digit private sector credit growth. GDP per capita was around USD 25,000 in 2013, and is expected to grow by an average of 1% during the 2014-16 period. The banking system is very sound and currently poses little risk to the public finances.

Notwithstanding the strong financial position and favourable prospects, the sovereign's ratings remain constrained by structural fiscal shortcomings “ in particular the over reliance on oil and the narrow non-oil tax base, as well as institutional weaknesses, socioeconomic challenges and limited fiscal transparency.

The public finances are somewhat vulnerable to oil price shocks on account of the high dependence on oil revenue (which accounts for about 92% of total revenues) and a narrow tax base (3% of total revenues). The oil price required to balance the budget has gradually increased during recent years “ to over USD84 a barrel in 2013 “ and in the absence of structurl fiscal reforms is likely to continue drifting upwards in the medium to long term, given population-driven demand for public services and subsidised utilities.

With the population increasing by more than one million every two years, job growth remains a key challenge for the authorities. Although labour market reforms and measures to correct the status of expatriates have contributed to a 21% increase in the number of Saudi nationals employed in the private sector, the unemployment rate was relatively high at 12% in 2013 and is unlikely to decline significantly “ if at all “ in the intermediate term.


In CI's opinion, government operations and policymaking structures lack adequate transparency and accountability, particularly in comparison with more advanced economies, and the quality of governance indicators are generally weaker. On the external front, Saudi Arabia is exposed to the same geopolitical event risk that affects the ratings of all Gulf sovereigns, including potential threats to trade, infrastructure and security from a military conflict in the Middle East region. Saudi Arabia is also exposed to succession risks.


RATING OUTLOOK

The Outlook for the ratings is 'Stable'. This indicates that Saudi Arabia's ratings are likely to remain unchanged over the next 12 months, and balances the country's strong external liquidity and the government's strong fiscal position against its dependence on oil revenue and institutional weaknesses.



CONTACT

Primary Analyst
Dina Ennab
Sovereign Analyst
Tel: 357 2534 2300
E-mail: dina.ennab@ciratings.com

Rating Committee Chairman
Karti Inamdar
Senior Credit Analyst


The ratings have been initiated by Capital Intelligence. The rated entity did not participate in the rating process. The information source used to prepare the credit ratings is public information. Capital Intelligence had access to the published fiscal and external accounts, but not to any other internal documents of the issuer for the purpose of the rating. However, CI considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.

The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in December 1996. The ratings were last updated in December 2013.

The principal methodology used in determining the ratings is Sovereign Rating Methodology. The methodology, the meaning of each rating category, the time horizon of rating outlooks and the definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com. Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at http://cerep.esma.europa.eu.


About Capital Intelligence (CI)
Capital Intelligence (CI) has been providing credit analysis and ratings since 1985, and now rates over 400 Banks, Corporates and Financial Instruments (Bonds & Sukuk) in 37 countries. A specialist in emerging markets, CI's geographical coverage includes the Middle East, the wider Mediterranean region, Central and Eastern Europe, South Asia, South-East Asia, the Far East, and North and South Africa.In May 2012, CI registered as a credit rating agency in accordance with Regulation (EC) No. 1060/2009 of the European Parliament and of the Council on credit rating agencies.

 


MENAFN Press




  MENA News Headlines
 Apr 30 2016 - Qatar's MPHC net profit up 83 percent in Q1MENAFN
(MENAFN) Mesaieed Petrochemical Holding Co. posted net profit of USD 58.28mn for the first quarter of this year, an increase of 83 percent.Furthermore, the increase was attributed to growth sales ...

 Apr 30 2016 - Aaml Co. net profit jumps 33.7 percent in Q1MENAFN
(MENAFN) Aamal firm, one of the GCC's fastest growing firms, proclaimed net profit of USD 42.18mn for Q1 of this year, a jump of 33.7 percent.Additionally, group profit were up 6.9 percent to USD ...

 Apr 30 2016 - Egypt, UAE to discuss relations in real estate projectsMENAFN
(MENAFN)Egypt and UAE will discuss real estate investment projects that UAE seeks to participate in.Moreover, these projects involve the New Administrative Capital, as well as housing projects in ...

 Apr 29 2016 - Omani power firm to build vital power facilityMENAFN
(MENAFN) Omani Musandam Power Company SAOC (MPC) will construct the Musandam Independent Power Plant (Musandam IPP) in the Musandam Governorate.As a high level official stated, the firm's strategy ...

 Apr 29 2016 - Saudi, French bilateral trade to reach USD13.6bMENAFN
(MENAFN) The Saudi-French Business Opportunities Forum taking place in Saudi Arabia delivers the finest stage to advance parts of mutual collaboration in many new areas.The two countries enjoy great ...

 Apr 29 2016 - KSA continues to prioritize low spendingMENAFN
(MENAFN) Saudi plans to return unspent money which was allocated in this year's budget for the purpose of cutting waste as state revenues weakens due to low oil prices.In the recent past, government ...

 Apr 29 2016 - Qatar- El Jaish aim to dethrone LekhwiyaThe Peninsula
(MENAFN - The Peninsula) Lekhwiya players lift the Qatar Cup trophy in this May 2 2015 file picture. Doha: El Jaish will be looking for a repeat of their 2014 Qatar Cup success when they ...

 Apr 29 2016 - Qatar Cup Trophy Tour stops at OoredooThe Peninsula
(MENAFN - The Peninsula) Doha: The Qatar Cup tour made its final stop at Ooredoo the official telecom partner of the Qatar Cup 2016. Staff and management took an opportunity to take photos and ...

 Apr 29 2016 - Al Rayyan rally to win Qatar Cup titleThe Peninsula
(MENAFN - The Peninsula) Al Rayyan SC players and officials celebrate while receiving the Qatar Cup after they beat El Jaish SC 21-25 25-18 25-17 32-34 18-16 in the final played at Ali Bin Hamad Al ...

 Apr 29 2016 - Qatar- Emir Cup: Al Kharaitiyat Al Gharafa earn thrilling wins to advanceThe Peninsula
(MENAFN - The Peninsula) Al Sailiya’s Abdurahman Al Harazi (left) celebrates after scoring the first goal for his team during their Emir Cup third round match against Al Wakrah SC at Al Arabi ...

 Apr 29 2016 - Steinmeier doubts Trump's 'America first' planThe Peninsula
(MENAFN - The Peninsula) German Foreign Minister Frank-Walter Steinmeier gestures during a joint press conference with Portuguese Foreign Minister Augusto Santos Silva (not seen) after their meeting ...

 Apr 29 2016 - Qatar- Met predicts a hot day with some cloudsThe Peninsula
(MENAFN - The Peninsula) Doha: The weather forecast for Qatar valid until 6pm Thursday inshore will be hot during the day with some clouds offshore will be hazy to misty at places and partly ...

 Apr 29 2016 - Qatar key to boosting Turkey-GCC tiesThe Peninsula
(MENAFN - The Peninsula) Emir H H Sheikh Tamim bin Hamad Al Thani met Turkey’s Prime Minister Dr Ahmet Davutoglu and his delegation at the Emiri Diwan yesterday. They discussed relations ...

 Apr 29 2016 - Qatar- Emir welcomes King Mohammed of MoroccoThe Peninsula
(MENAFN - The Peninsula) Emir H H Sheikh Tamim bin Hamad Al Thani welcomes King Mohammed VI of the Kingdom of Morocco and his delegation at Hamad International Airport. Doha: Emir H H Sheikh ...

 Apr 29 2016 - Qatar eyes 'best of the best' turf for 2022The Peninsula
(MENAFN - The Peninsula) A worker tends to grass being grown at a research and development centre in Murakh to find the best playing surface for FIFA 2022 yesterday. Doha: Watching grass grow ...

 Apr 29 2016 - Qatar discusses WTD eventsThe Peninsula
(MENAFN - The Peninsula) Doha: Qatar Tourism Authority (QTA) yesterday held a meeting with UN World Tourism Organisation (UNWTO) to discuss Qatar’s preparations to host World Tourism Day 2017. ...

 Apr 29 2016 - Qatar- Premier meets EU Counterterrorism CoordinatorThe Peninsula
(MENAFN - The Peninsula) Doha: Prime Minister and Interior Minister H E Sheikh Abdullah bin Nasser bin Khalifa Al Thani yesterday met European Union Counterterrorism Coordinator Gilles de Kerchove ...

 Apr 29 2016 - Qatar- QU University of Illinois sign dealThe Peninsula
(MENAFN - The Peninsula) DOHA: An agreement signed between Qatar University College of Medicine (QU-CMED) and the Board of Trustees of the University of Illinois at Chicago (UIC) has established ...

 Apr 29 2016 - Qatar- AZF Ramadan Sports Festival from June 10The Peninsula
(MENAFN - The Peninsula) DOHA: Aspire Zone Foundation (AZF) has added cricket and rugby to its annual Ramadan Sports Festival which starts on June 10. The two-week event will end on June 24 (5-19 ...

 Apr 29 2016 - Qatar- First phase of mapping genetic code of citizens in final stageThe Peninsula
(MENAFN - The Peninsula) By Fazeena Saleem DOHA: The initial phase of an initiative to map the genetic code of citizens for better diagnoses and treatment of diseases in Qatar has reached the ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help