Abu Dhabi gets stable outlook from Fitch
Dubai, September 24, 2011
Fitch Ratings has affirmed Abu Dhabi's long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA' with a stable outlook.
The ratings agency has also affirmed Abu Dhabi's short-term foreign currency IDR at 'F1+', while the UAE country ceiling has been given 'AA+' rating.
'The affirmation and stable outlook reflect the continuing strength of Abu Dhabi's sovereign balance sheet, which conveys exceptional fiscal flexibility,' said Richard Fox, head of Middle East and Africa Sovereigns at Fitch.
'The 2008-2009 global financial crisis was a severe stress test for Abu Dhabi, but one which left its balance sheet largely undented. Any future stress would have to have harsher consequences than this to trigger negative rating action,' Fox added.
Abu Dhabi's rating is anchored by one of the strongest balance sheets of any rated country. Foreign assets, including equity investments, are estimated by Fitch at approaching $300 billion, with just $4 billion of direct sovereign external debt.
Sovereign net foreign assets of an estimated 167 per cent of GDP are therefore second only to Kuwait. Fitch estimates gross sovereign financial assets by the end of 2011 will be 16 per cent higher than their end-2007 level, having dipped only slightly in 2008.
At current oil prices, they are forecast to rise steadily, propelled by investment returns and overall fiscal surpluses.
The agency estimates the overall fiscal balance, including Adnoc dividends and ADIA investment income, was close to balance last year, and forecasts a double digit percentage of GDP surplus this year, based on higher oil prices and production and contained spending.-TradeArabia News Service