Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Jordan - sovereign ratings affirmed at bb-  Join our daily free Newsletter

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



(MENAFN Press) 27th June 2014

Jordan's Sovereign Ratings Affirmed at 'BB-'


RATING ACTION

Capital Intelligence (CI), the international credit rating agency, has today affirmed Jordan's Long-Term Foreign Currency Rating of 'BB-' and its Long-Term Local Currency Rating of 'BB'. At the same time, CI has also affirmed Jordan's Short-Term Foreign and Local Currency Ratings of 'B'. The Outlook for Jordan's Long-Term Foreign and Local Currency Ratings has been affirmed at 'Stable'.


RATING RATIONALE

The affirmation of Jordan's ratings balances the recent improvement in the country's capacity to absorb economic shocks against rising geopolitical risk.

Benefiting from increased support from international donors, Jordan's foreign exchange reserves grew by more than 80% in 2013, now fully covering external debt falling due within a year. The external current account deficit declined by almost one-third last year “ albeit to a still very high 14.4% of GDP “due to the combination of lower oil prices, higher workers' remittances and the resumption in the supply of low-cost gas from Egypt. The rate of dollarization in the financial system also declined, reflecting renewed confidence in the local currency.

Balance of payments risks are expected to remain high in the intermediate term, and the gross external financing requirement is expected by CI to exceed 34% of GDP this year. Near-term risks are, however, greatly mitigated by the recently restored official reserve buffer and ongoing financial assistance from regional and strategic allies, as well as international financial institutions.

The ratings affirmation also takes into account the authorities' commitment to structural reforms, which are aimed at correcting the economy's chronic imbalances. Despite a challenging regional environment, the economy grew by almost 3% for the fourth year in a row in 2013 and is expected to expand by a further 3.5% this year. Medium-term growth prospects would be favourable if it were not for the currently unsettled geopolitical situation, with the influx of refugees from neighbouring Syria aggravating socioeconomic imbalances and putting pressure on scarce resources. The growing insurgency in Iraq is also adding to security concerns.

The public finances remain the major constraint on Jordan's ratings in view of the weak budget structure, growing debt burden and high financing requirements. The overall central government budget deficit declined to 5.3% of GDP in 2013 from 8.3% in 2012. However, the deficit would have been 8.1% of GDP but for foreign grants “ which highlights the importance of external support for fiscal sustainability.

Gross central government debt continues to rise and is likely to exceed 90% of GDP by 2016, reflecting chronic fiscal deficits and the continued issuance of government-guaranteed debt for loss-making public entities, in particular the National Electricity Production Company (NEPCO). Interest expenditure exceeded 12% of budget revenue in 2013, and is expected to continue increasing in view of the growth of the debt stock and high domestic borrowing costs.

Refinancing risks remain high, with government debt falling due in the region of 25% of GDP in 2014. However, near-term refinancing risks appear manageable given that the majority of scheduled debt repayments are in local currency and local banks appear able and willing to buy local currency debt. In addition, the government is expected to meet a large part of its short-term financing needs through the issuance of a second eurobond guaranteed by the US government.


The government has expressed its commitment to fiscal consolidation over the coming years and aims to reduce the budget deficit to about 3% of GDP by 2015. However, this could prove extremely challenging in the current economic and political environment.

LOCAL CURRENCY RATINGS

The higher local currency rating reflects the government's stronger repayment capacity in Jordanian dinars due to moderate monetary policy flexibility and control of the tax system. The local currency ratings also reflect banking sector liquidity and the progress made with regards to developing the government debt market. Local banks are expected to remain willing and able purchasers of government debt over the medium-term, in part due to the lack of alternative domestic investment opportunities and the availability of substantial excess liquidity (estimated at USD4.4 billion in conventional banks).


RATING OUTLOOK

The 'Stable' Outlook indicates that Jordan's sovereign ratings are likely to remain unchanged over the next 12 months, and balances improving international liquidity and the likely availability of external financial assistance in times of need on the one hand, against the country's high debt metrics and significant geopolitical risk on the other.


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. CI had access to the published fiscal and external accounts of the rated entity, but did not have access to any other internal documents for the purpose of the rating. CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings. CI 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 rated entity 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.www.ciratings.com

 


MENAFN Press




  MENA News Headlines
 Oct 23 2014 - 18m vehicles likely on Saudi roads by year-endArab News
(MENAFN - Arab News) Eighteen million licensed vehicles are likely to be on Saudi roads by the end of this year from 17 million last year according to a study published by Al-Eqtisadiah daily. The ...

 Oct 23 2014 - Saudi Aramco, Chinese Sepco sign dealMENAFN
(MENAFN) Saudi Aramco announced it has signed a contract with a Chinese group for a project to help expand the capacity of the main gas pipeline across Saudi Arabia, in a project that aims to improve ...

 Oct 23 2014 - Qatar Digital Library launchedThe Peninsula
(MENAFN - The Peninsula) Over half a million pages of archives and manuscripts on the history of Qatar and the Gulf and Arab Islamic sciences are available free online with the launch of Qatar ...

 Oct 23 2014 - Qatar- Deals with Turkey agencies to educate Syrian refugeesThe Peninsula
(MENAFN - The Peninsula) H H Sheikha Moza bint Nasser, Chairperson, Education Above All, yesterday witnessed the signing of two memorandums of understanding between EAA and two Turkish development ...

 Oct 22 2014 - Saudi- Pak expats recall soldiers' braveryArab News
(MENAFN - Arab News) Mavra a Riyadh-based women's literary and cultural organization celebrated Pakistan Defense Day aimed at paying tribute to the country's armed forces.In the first part of the ...

 Oct 22 2014 - China Fiscal Revenue Rises 6.3% in SeptemberQatar News Agency
(MENAFN - QNA) China's fiscal revenue rose 6.3% year on year to 995.3 billion yuan about (162.6 billion US dollars) in September, quickening from a 6.1% rise in August, the Chinese Ministry of ...

 Oct 22 2014 - Tokyo Stocks End Sharply up WednesdayQatar News Agency
(MENAFN - QNA) Tokyo stocks ended sharply higher Wednesday, boosted by overnight rises in European and US stocks. The 225-issue Nikkei Stock Average rose 391.49 points, or 2.64%, from Tuesday to ...

 Oct 22 2014 - Cooperating Robots Developed in China-US ProjectQatar News Agency
(MENAFN - QNA) An award-winning collaboration between Chinese and American researchers has pointed the way forward for the use of cloud computing to link different robots and make them more ...

 Oct 22 2014 - Summary of Local News Released Tuesday - 3-Qatar News Agency
(MENAFN - QNA) - World Innovation Summit for Health (WISH) has appointed chairperson for the WISH Dementia Forum that will mull current challenges, innovation in care-giving, financial models and ...

 Oct 22 2014 - Ban Calls for Investigation into Israeli Attacks on UN Facilities in GazaQatar News Agency
(MENAFN - QNA) United Nations Secretary-General Ban Ki-moon called for a thorough investigation into incidents where UN facilities sustained hits and many innocent people were killed by the Israeli ...

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