Top agencies rule out credit ratings for UAE
London, March 7, 2012
Ratings agencies have no plans to give the UAE or Dubai a credit rating because their governments have not asked to be rated, and their lack of transparency would make a credit assessment difficult, a senior analyst at Fitch said.
There has been speculation in the past year that Dubai might seek a rating, to help with the placement of its international bonds, or that UAE might seek to issue a bond of its own.
Some investors' mandates do not allow them to buy unrated bonds.
'We don't rate the UAE or Dubai, they haven't asked us or anyone else for a rating,' Richard Fox, head of Middle East and Africa sovereigns at Fitch, told a Fitch Middle East and North Africa briefing in London.
All three major ratings agencies do rate UAE member Abu Dhabi, however. Fitch and Standard & Poor's rate Abu Dhabi AA while Moody's rates it Aa2 and all three ratings have stable outlooks.
Ratings agencies can make unsolicited ratings but most are made at the request of a borrower, and those assessments require access to detailed financial information, Fox added.
'Official information (on Dubai and the UAE) remains very weak, we've downgraded our coverage,' Fox said, adding that neither published detailed external debt or budget performance data.
Fox also said Libya has not yet requested a fresh rating, after Fitch withdrew its ratings last year as political unrest spread across the North African country.
Fox said that political risk was an issue for many countries in the Gulf region and such concerns could cut their ratings levels by half a notch to a full notch.
'They have a weaker score compared with their peer group on World Bank governance indicators,' he said.
Most countries in the region have investment grade ratings and stable outlooks from Fitch.
Fox said any attack by Israel or the US on Iran was likely to have negative implications for countries such as Bahrain and Qatar, which host US bases, as well as for Israel itself and for Lebanon, due to the country's pro-Iranian Hizbollah movement.
Expectations of such an attack are rising, according to Dublin-based online exchange Intrade.com, which puts the chances of an attack by the end of the third quarter at more than 40 per cent.
For Egypt, which has a BB- rating and negative outlook following two downgrades, Fox reiterated comments released earlier that falling reserves were a concern and it was important for the country to strike a deal with the International Monetary Fund.-Reuters