Qatar’s sovereign credit fundamentals could be negatively affected by ingoing diplomatic spat
Qatar’s credit outlook was cut to negative by Moody’s Investors Service, which cited economic and financial risks from an ongoing diplomatic spat between the OPEC nation and its Arab neighbours.
The ratings firm lowered the nation’s outlook from stable on concern a quick resolution of the spat is unlikely, but kept its long-term issuer rating at Aa3, according to a statement dated July 4.
Barring a “swift resolution,” economic activity will likely be thwarted by an air, land and sea blockade by countries including Saudi Arabia and UAE, Moody’s said.
"The likelihood of a prolonged period of uncertainty extending into 2018 has increased and a quick resolution of the dispute is unlikely over the next few months, which carries the risk that Qatar’s sovereign credit fundamentals could be negatively affected," Moody’s wrote in the report.
A month-long blockade by the Saudi-led coalition has put pressure on Qatar’s assets and finances. The group, which accuse the Gulf state of financing terrorists, has demanded it comply with a list of 13 demands by July 5 to end the spat. But even before the dispute began in early June, Moody’s cut Qatar’s rating by one level, citing uncertainty over the country’s economic growth model.
S&P Global Ratings last month lowered Qatar’s long-term grade by one level and put it on negative watch. Less than a week later, Fitch Ratings said it was also considering a cut.