Both governments have high levels of accumulated wealth
S&P Global Ratings affirmed its ratings for Kuwait and Abu Dhabi.
For Kuwait, the AA/A-1+ long- and short-term foreign and local currency sovereign credit ratings have been affirmed with a stable outlook.
The ratings on Kuwait continue to be supported by the sovereigns high levels of accumulated fiscal, external, and household wealth, despite the Subdued - albeit improved - oil price environment. The ratings are constrained by the concentrated nature of the economy and regional geopolitical tensions, said S&P.
For Abu Dhabi, S&P affirmed its AA long-term and A-1+ short-term foreign and local currency sovereign credit ratings for the emirate with a stable outlook.
The ratings are supported by Abu Dhabis strong fiscal and external positions. The exceptional strength of the governments net asset position provides a buffer to counteract the negative impact of lower oil prices on economic growth, government revenues, and the external account, said S&P.
The ratings are constrained by S&Ps assessment that the emirate has less-developed political institutions than non-regional peers in the same rating category.
Abu Dhabi also has limited monetary policy flexibility due to the fact that the UAE dirham is pegged to the US dollar, as well as gaps and delays in the provision of macroeconomic, fiscal, and external data, and an underdeveloped local currency domestic bond market.
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