Saudi Arabia’s credit rating was affirmed by S&P Global Ratings as its heir to the throne, Crown Prince Mohammed bin Salman, is on a three-week tour of the US in search of deals that would diversify his country’s oil-dependent economy.
S&P affirmed Saudi Arabia’s rating at A- and kept the outlook stable. “We expect Saudi Arabia will experience modest economic growth from 2018, supported by rising government investment and, later in our forecast period, a gradual increase in oil production,” the agency said in a statement.
Saudi Arabia’s economy contracted 0.5 percent last year after lower oil prices led to a ballooning budget deficit and shrinking reserves. The Crown Prince’s ambitious development plan - Vision 2030 - seeks to wean the country off oil while privatising state-owned companies, including the sale of a stake of up to 5 percent in oil giant Aramco.
S&P last altered its Saudi rating in February 2016, downgrading it to A- as the country wrestled with the rout in oil prices. The kingdom is rated A1 by Moody’s Investors Service and A+ by Fitch Ratings.
Saudi Arabia plans to borrow about $31 billion this year to bridge an expected budget deficit of $52 billion and fund its growth plans. It raised about $36 billion in 2017, $14 billion of which was from domestic bonds and $22 billion from international debt markets. Authorities have so far struggled to raise non-oil revenue.
Saudi dollar bonds were the worst-performing among the 190-member Bloomberg Barclays GCC Credit Index in the first quarter, even as oil prices rallied to their highest level since late-2014.
The kingdom’s bonds due 2046 fell 5.22 percent, while those due 2047 dropped 4.92 percent. That compared with an average fall of 2.35 percent in total returns for sovereign bonds.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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