Moody’s downgrades GCC corporates

Gulf_Cooperation_Council_flagsRating agency Moody’s has downgraded its outlook on Gulf Cooperation Council (GCC) non-financial corporates from stable to negative, citing deteriorating credit conditions in the region. In its annual report on the sector, which covers non-financial corporates across Emea, Moody’s highlighted slowing GDP growth as a limit on GCC governments’ ability to fund initiatives designed to stimulate their respective economies. Companies are also likely to face weaker demand, weighing on their performance and increasing the risk of default. “Despite corporate liquidity remaining generally solid, and low interest rates, we expect defaults to rise, though from a very low base,” said Richard Morawetz, Moody’s vice president, senior credit officer and author of the report. Moody’s also gives a negative outlook for Turkey’s corporate sector, due to the weak credit quality of domestic financial institutions and low growth across the EU, its largest export market. Corporate liquidity risk is mitigated by large foreign currency cash deposits, although access to these could be restricted in the event of capital controls. ©2019 funds global mena

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