DUBAI: Standard and Poor’s projected in a recent report that GCC (Gulf Cooperation Council) is likely to weaken economic profiles in 2015.
The rating agency’s latest Middle East and North Africa (MENA) report says the region’s overall creditworthiness has dropped since last summer. However, of the 12 MENA sovereigns that S&P rates, it has only lowered the ratings on Bahrain and Oman since oil prices plummeted more than 50 percent since June 2014.
Still, GCC sovereigns’ economies depend on hydrocarbon revenues and are therefore vulnerable to a sharp and sustained decline in oil prices, without substantial offsetting buffers, the report said.
Nine of the 12 MENA sovereigns S&P rates were ranked investment grade (BBB or above), but Egypt, Jordan, Lebanon – all hydrocarbon importers – were speculative grade. The average Mena sovereign rating is BBB+.
Standard and Poor’s downgraded Saudi Arabia’s rating from positive to stable on 5 December I view of the further decline in oil prices, the report said.
“Due to Saudi Arabia’s high dependence on the commodity we think that the sovereign’s very strong fiscal position could weaken.”
