Moody’s issues negative 2021 outlook for GCC sovereigns

Gulf Council Cooperation flagsThe Coronavirus-related fall in oil revenues, deterioration in fiscal strength and constraints in government spending have contributed to the negative outlook for 2021 for Gulf Cooperation Council (GCC) sovereigns’ creditworthiness issued by rating agency Moody’s. "Our negative outlook for GCC sovereigns reflects the coronavirus pandemic's impact on oil revenue and our expectations for the erosion of fiscal strength experienced last year to extend throughout 2021," said Thaddeus Best, a Moody's analyst and the report's co-author. "The still elevated cost of funding for lower-rated sovereigns in the region will amplify these strains." Moody’s expects that it will take two to three years for real GDP to return to pre-pandemic levels in the region. Furthermore, economic recovery will take longer in the more economically diversified sovereigns given that sectors such as transportation and tourism will be slower to return to economic health. The rating agency’s report also forecasts that GCC government debt burdens will increase this year by an average 21% points of GDP, although sovereign wealth fund buffers will go some way to mitigating the impact of higher debt burdens for most GCC economies. The less creditworthy sovereigns, however, will likely face borrowing costs above pre-coronavirus levels despite a significant easing of market conditions compared to the first half of 2020. ©2021 funds global mena

Sponsored Profiles

There’s no doubt that Africa has been seen increasingly as an attractive prospect for inbound investment in recent years, with investors seeing real potential in the continent, particularly in the private equity, infrastructure and real estate asset classes, as it experiences strong economic growth.

Plausible explanations exist for why low-volatility stocks perform better than their high-volatility counterparts.

Aberdeen Asset Management has set up its first Middle East office in the newly established Abu Dhabi Global Market. Andrew Paul, senior executive officer, explains why.

A recent sovereign bond issue from Saudi Arabia underlines the appeal of emerging market investing. What must investors consider when allocating to this asset class? Firas Mallah of BMO Global Asset Management shares his views.

Executive Interviews

INTERVIEW: ‘Financing is the blood of Iran’s economy’

Amid a fresh wave of American sanctions, Romil Patel spoke to Meysam Hamedi, director of financial markets and instruments at Iran’s Securities & Exchange Organization (SEO).

INTERVIEW: Totally mega

In 2016, global consulting firm PWC forecast the emergence of five global ‘megatrends’ in the next two decades. Stephen Anderson, its Middle East clients and markets leader, talks about their...

INTERVIEW: Protecting the investment

Rasmala’s trade finance fund recently passed $100 million in assets. Doug Bitcon, head of credit strategies, explains why he has to be hands-on.

EXECUTIVE INTERVIEW: A natural interest in the topic

Since 2016, Guillermo Ortiz has been a chairman of Latin America’s BTG Pactual. The former central banker of Mexico talks to Nick Fitzpatrick.


Middle East Investor Roundtable 2020: Dimensions of diversification

Investors in the Middle East consider the tools that will be needed to navigate the Covid-19 crisis, the continued appetite for dividend and why it’s all about tech. Chaired by Romil Patel.

South Africa asset management roundtable: Global rebound on ice

Experts discuss the investment implications of the coronavirus pandemic, a delayed rebound in global growth and dealing with South Africa’s energy issues head on. Chaired by Romil Patel in Cape Town.

South African roundtable: Taking the bull by the horns

Our panel discusses Chinese investment in Africa, financial institutions’ contribution to economic sustainability and regulatory concerns. Chaired by Romil Patel in Cape Town.

ROUNDTABLE: Hooked to the global caravan

With the MENA region at a tipping point, our panellists talk about economic diversification, the impact of regulation and the delayed Saudi Aramco listing. Chaired by Romil Patel in Dubai.