Quotes: US 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 structural 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.

 






  MENA News Headlines
 Jul 24 2014 - A forgotten tragedyUN experts call for a stronger response to internal displacement in NigeriaMENAFN Press
(MENAFN Press) GENEVA Switzerland July 23 2014/African Press Organization (APO)/ -- Two United Nations human rights experts today called on the Government of Nigeria and the international community ...

 Jul 24 2014 - Address by Cathy McLeod Parliamentary Secretary to the Minister of LabourMENAFN Press
(MENAFN Press) OTTAWA Canada July 24 2014/African Press Organization (APO)/ -- Check Against Delivery Good morning/afternoon. Thank you for joining us. We are here today to discuss a global ...

 Jul 24 2014 - Flydubai to start Mumbai flights in OctoberspanKhaleej Times
(MENAFN - Khaleej Times) Bai-based flydubai on Wednesday announced the launch of flights to Mumbai bringing the total number of destinations served by the carrier in India to seven with 25 flights a ...

 Jul 24 2014 - Dubai: A vision not an illusionspanKhaleej Times
(MENAFN - Khaleej Times) W laws will reinforce Dubais position as a sought-after global investment and business destination Hisham Abdulla Al Shirawi tells Khaleej Times “Dubai and the UAE as a ...

 Jul 24 2014 - Real estate deals in Dubai hit Dh113 billionspanKhaleej Times
(MENAFN - Khaleej Times) Ga projects and investor confidence behind strong transaction volumes The launch of mega projects and renewed investor confidence have boosted real estate transactions in ...

 Jul 24 2014 - Mashreq bank profit surges 40spanKhaleej Times
(MENAFN - Khaleej Times) Shreq bank announced on Wednesday a 40 per cent increase to Dh1.The bank said it net profit in the second quarter reached Dh585 million an increase of 45 per cent from last ...

 Jul 24 2014 - Marka to list on DFM in SeptemberspanKhaleej Times
(MENAFN - Khaleej Times) Rka a public joint stock company with a capital of Dh500 million on Wednesday announced plan to list its shares on the Dubai Financial Market in the second week of September ...

 Jul 24 2014 - Al Maya opens supermarket in Al Reem IslandspanKhaleej Times
(MENAFN - Khaleej Times) Maya Group has extended its reach in Abu Dhabi by opening its fourth supermarket in the countrys capital and first on Al Reem Island the company said.“The group ...

 Jul 24 2014 - Fees and commission boost FHs H1 earningsspanKhaleej Times
(MENAFN - Khaleej Times) Nance House has posted a robust consolidated net-profit of Dh61.Net fee and commission income grew by a whopping 75 per cent year-on-year to Dh35.8 million. Similarly income ...

 Jul 24 2014 - Majid Al Futtaim revenues jump 14 in first halfspanKhaleej Times
(MENAFN - Khaleej Times) Rong performance across the businesses has boosted Majid Al Futtaims first-half revenues by 14 per cent compared to same period last year the Dubai-based company announced on ...

more...


 






Google

Click to Apply

 
 

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

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

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
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

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


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help