By Andrew White
Ratings agency says new scale should give better comparison of risks across the GCC.
Standard & Poor's Rating Services (S&P) has launched a new regional credit rating scale for the GCC.
According to the agency, the new scale should better allow Gulf issuers and investors to compare the relative credit risk of issuers and issuances across the region.
S&P said the GCC scale will cover a wide array of funding instruments issued in local currencies, including capital markets debt, project finance debt, bank loans, and Shariah-compliant obligations.
It is designed to complement S&P's existing global rating scale, which remains available to issuers in the GCC, by providing a finer distinction of the relative credit quality of Gulf debt issues and issuers, the agency said.
"S&P started developing the GCC regional scale in early 2008, when local currency debt issuance was quite high," said Jan Willem Plantagie, Middle East regional manager at S&P's.
"Although local debt issuance peaked in 2006-2008, we expect a resurgence in local currency issuance over the coming years, driven by large financing needs for infrastructure development, stronger competition for funds in the GCC, and government initiatives to stimulate local bond markets, such as those being undertaken in Saudi Arabia,” he added. “The anticipated launch of the GCC Monetary Union is also expected to drive demand for regional scale ratings."