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Moody's upgrades five Gulf nations

Moody's Invstors Service has upgraded the credit ratings of five GCC countries to reflect the ongoing strengthening of their public and external finances due to higher oil prices.

The ratings service yesterday upgraded the long-term foreign and domestic currency government bond ratings, and the country ceilings for long-term foreign currency bank deposits, for Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.
"The marked improvement in the economic fundamentals of the Gulf countries has mainly been caused by the sustained rise in global hydrocarbon prices over the past five years," Tristan Cooper, a Moody's analyst in London, said in a statement.

"However, we have also been encouraged by the relatively prudent use of oil export receipts compared with previous oil booms."

Bahrain was upgraded to A2 from A3, Kuwait went to Aa2 from Aa3, Oman was raised to A2 from A3, Qatar was upgraded to Aa2 from Aa3, and Saudi Arabia was raised to A1 from A2.

Saudi Arabia received a ‘positive outlook' rating while the other four GCC countries have a ‘stable outlook'.

Cooper added that the pace of overall government expenditure is growing rapidly and has accelerated across the GCC as a whole over the past three years.

The improvement in the economic strength of the Gulf states justifies the ratings upgrade as it has enhanced the governments ability to withstand both political and economic shocks, moody's said in its report.

"Given the GCC government's large and growing asset position and low levels of debt, it would take a severe and sustained adverse political scenario to cause a government bond default either in local or foreign currency," Cooper said.

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