ArabianBusiness.com - Middle East Business News
Sunday, 05 July 2009 07:52 UAE time

YOUR DIRECTORY /

| Share |

Saudi credit boost as oil prices rocket

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Wednesday, 09 July 2008
CREDIT BOOST: Fitch has upgraded Saudi's sovereign ratings on the back of record oil prices. (Getty Images)

Fitch Ratings on Wednesday upgraded Saudi Arabia's sovereign ratings on the back of record oil prices, but warned a sharp correction in the market could threaten its creditworthiness.

The ratings agency upgraded Saudi's long-term local and foreign currency issuer default ratings (IDRs) to 'AA-' from 'A+'. The outlooks have been revised to stable from positive, it said.

The country ceiling has also been upgraded to 'AA' from 'AA-' and the short-term IDR has been upgraded to 'F1+' from 'F1', Fitch said.

Story continues below
advertisement

"At today's oil prices, Saudi Arabia is earning around $1 billion a day from oil exports, reinforcing an already strong external balance sheet and creating a buffer against future shocks," Charles Seville, associate director in Fitch's sovereign team, said in a statement.

The agency said Saudi's main credit strengths were its very low indebtedness and large domestic and external assets.

General government debt, all of it domestic, fell to 7.2 percent of GDP at end-2007, while the wider public sector, represented mainly by profitable state-owned firms, has little external debt, it added.

Fitch said the kingdom's overwhelming dependence on oil - 90 percent of central government revenue comes directly from oil - left it exposed to a sharp drop in oil prices.

However, Fitch added that the government budgeted cautiously and could withstand oil prices as low as $30 a barrel for several years, without major spending adjustments, thanks in part to the Saudi's sizeable domestic and external assets, and capacity to borrow.


For news updates sign up for our newsletter
| Share |


READERS' COMMENTS

Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.

Click here to post a comment


Add your Comment
All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *
(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments


Please click post only once - your comment will not be published immediately.


MORE FROM ARABIANBUSINESS.COM

SHARE PRICE CHECK

 EMAIL ALERTS

  1. Fitch Ratings

  2. Banking & Finance



READER COMMENTS

Read all user comments >

BUSINESS FEATURES

On the REIT track

Is the Middle East ready to embrace Real Estate Investment Trusts as an investment class?

Is your bank exposed to troubled Saudi groups?

Find out the exposure of some of the Gulf’s top banks to the troubled Saad, AHAD groups.

Credit Suisse traders keep rockin’ through firings

Keep swinging with the former Wall Street workers swapping music for money.

BUSINESS INTERVIEWS

Mumbai millions

Dubbed the Bill Gates of India, Ajit Balakrishnan talks markets, mobiles and slumdog millionaires.

Securing data

Netik's executive vice president Keith Hale explains why the company stands head and shoulders above the competition.

'The worst is yet to come'

Former World Bank chief James Wolfensohn warns that the global economy is facing a long road to recovery.

MORE FROM ARABIANBUSINESS.COM