The diplomatic rift between Qatar and a group of countries led by Saudi Arabia threatens the credit ratings of every state in the Gulf Cooperation Council (GCC).
Ratings agency Moody’s, which gave the warning, states that Qatar, as the target of an embargo, and Bahrain, with its relatively weak balance sheet, are most at risk.
“The severity of the diplomatic dispute between Gulf countries is unprecedented, which magnifies the uncertainty over the ultimate economic, fiscal and social impact on the GCC as a whole,” said Steffen Dyck, senior credit officer.
The dispute flared up three months ago when countries including Saudi Arabia and the UAE cut ties with Qatar, accusing the small nation of interfering in other states’ affairs and of supporting terrorism.
Despite mediation from Kuwait and the US, Moody’s asserts there is “no resolution in sight” for the dispute, which the agency says is credit negative for all seven of the countries in the GCC.
In July, Moody’s downgraded Qatar’s outlook from stable to negative in consequence of the rift.
©2017 funds global mena