Kuwait has received its third sovereign credit rating from an international agency.
Thomson BankWatch has assigned Kuwait a grade of A for its sovereign risk rating, following earlier assessments by US agency Moody’s Investors Service and European agency IBCA.
The high rating was due to Kuwait’s oil and gas revenues, trade and current account surpluses and low levels of debt, the agency says.
Constraining factors include the vulnerability of oil income to market fluctuations, heavy public spending and geopolitical risks associated with Iraq and Iran. The assessment echoes that made by the agency last week for the UAE, which nonetheless received a slightly higher sovereign rating of A+ (MEED 27:9:96).
IBCA, which rated Kuwait at the start of this year, gave the country a grade of A for long and short-term credit. Moody’s rated it Baa 1 for foreign currency notes and deposits and Prime-2 for local currency issues. There is no suggestion that the Kuwaiti government intends to borrow abroad, but the sovereign rating sets a ceiling for future ratings of banks within the country.
Thomson BankWatch and Moody’s have been the most active US raters in the Gulf so far, and the former tends to give very positive assessments of regional governments and banks while the latter is more cautious.
Thomson BankWatch also rated National Bank of Kuwait (NBK), the largest of the country’s domestic banks. NBK was assigned the top intra-country (local currency) issuer rating of IC-1 and a short-term rating of LC-1 (see Kuwait).