Qatar at greatest risk of ratings downgrade

Qatar is at greater risk of having its credit rating downgraded than any other country in the world, according to ratings agency Standard & Poor’s (S&P).

Qatar’s fiscal position is perceived to be weak because of its ongoing economic and political boycott by neighbouring Gulf states (Saudi Arabia, UAE, Bahrain and Egypt).

The country is currently rated as AA- by S&P, three notches above Saudi Arabia.

Although the cutting of diplomatic and transport links with Qatar has disrupted imports and led to a withdrawal of funds from its banks, Qatar has remained resilient. The country’s sovereign wealth fund has spent billions to support its banks, new trade routes have been developed for exporting liquefied natural gas and its AA- minus rating has helped it raise money on the international capital markets – a recent bond issuance received orders in excess of $52 billion.

However, S&P has warned that a prolonging of the boycott could put Qatar’s rating in jeopardy. “Diplomatic tensions should continue to pressure Qatar’s economic, fiscal and external metrics, especially if the boycott is tightened or prolonged,” said the agency.

©2018 funds global mena

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