Fitch upgrades Saudi debt rating

09 July 2008
Fitch Ratings has increased the ratings on sovereign debt from Saudi Arabia by one notch to AA- as a result of record oil prices, and says it expects the country to hold external assets worth more than its GDP by the end of 2008.

The latest rating action also includes raising the country’s ceiling rating to AA-, which will open up the possibility for a number of Saudi corporates to be upgraded.

“At today’s oil prices, Saudi Arabia is earning around $1bn a day from oil exports, reinforcing an already strong external balance sheet and creating a buffer against future shocks,” says Charles Seville, associate director of Fitch’s sovereign ratings team.

Fitch said that despite oil contributing 90 per cent of central government revenue, a fall in prices would have to be very steep to threaten its creditworthiness.

The government’s cautious budget means the country could sustain oil prices falling to $30 per barrel for several years without this having a major impact on government spending.

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