In line with the sovereign upgrade, S&P’s long-term foreign currency issuer credit rating on state-owned Qatar Petroleum (QP)has risen to A- from BBB+.

S&P said that the upgrade reflected recent reductions in the government’s debt and debt service burdens, driven mainly by increases in liquefied natural gas (LNG) exports. S&P estimates that general government debt was 60 per cent of gross domestic product (GDP) in fiscal 2001/02 and will decline to about 55 per cent in fiscal 2002/03.

S&P said that if the government’s domestic bank deposits are taken into account, its debt burden falls to about 32 per cent of GDP in fiscal 2001/02 and to a projected 27 per cent in 2002/03.

‘The positive outlook on Qatar reflects prospects for higher budgetary revenues, which, together with continued fiscal prudence, should enable the government to simultaneously increase its net foreign assets and invest in physical and human capital development,’ S&P’s director for sovereign ratings in the Middle East & Africa, Ala’a al-Yousuf, said. S&P added that the ratings could be raised again if the government increases its revenues from LNG exports, reduces its debt burden, enhances the transparency of its finances and strengthens the political systems and institutions.

News of the S&P upgrade resulted in Qatar 30-year bonds jumping by almost 3 points to 119 per cent of face value on 13 May.

Qatar is rated BBB+ by Cyprus-based Capital Intelligenceand Baa2 by the US’ Moody’s Investors Service. Moody’s is expected to announce its own upgrade soon.