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Fri 8 Apr 2011 10:57 AM

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Fitch says RAK finances are in good order

Ratings agency assigns a stable outlook to emirate, says it has bolstered its creditworthiness in 2010

Fitch says RAK finances are in good order
Ras Al Khaimah Free Zone.

Fitch Ratings said on Tuesday that Ras Al Khaimah's (RAK) public finances were in good order and assigned it a stable outlook.

Fitch affirmed RAK's long-term foreign and local currency issuer default ratings (IDR) at A.

"Ras Al Khaimah has significantly bolstered its creditworthiness over the past year," said Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch.

"The budget has moved back into surplus, debt has begun to decline and the debt maturity profile has benefited from proactive debt refinancing."

Fitch said RAK's public finances would be a key strength of its credit profile.

In 2009, RAK was adversely affected by the global financial crisis, particularly via its impact on Dubai - an important market.

That shock coincided with an ambitious infrastructure development programme, partly financed by debt, which saw a marked increase in public debt to over 30 percent of GDP in 2009.

"However, this period of rising debt is now over," Fitch said, adding that debt fell below 30 percent of GDP in 2010 and would fall nearer to 20 percent of GDP by the end of 2011.

"With debt pay down being financed from sales of non-core assets, cash balances are forecast to increase so that net debt will fall even faster than gross debt," Fitch added.

The rating agency said RAK had been adept at finding new markets for its products in response to the varying fortunes of key countries in the region.

RAK's main markets outside the UAE are now Qatar, Saudi Arabia and Kuwait.