Moody’s Emerging Market Chartbook 2020 measures Abu Dhabi, UAE, and Kuwait as the highest-rated emerging markets sovereigns amid coronavirus pandemic.
While it rated GCC’s largest economy Saudi Arabia’s sovereign as A1, it produced a higher rating of Aa2 to Abu Dhabi, UAE, and Kuwait. While Sharjah was rated separately at Baa2. All of Moody’s A and B ratings are investment grade.
The 2020 outlook for the sovereigns of Abu Dhabi, UAE, Kuwait, Saudi Arabia and Sharjah is stable. A sovereign credit rating, or a sovereign, is a nonpartisan evaluation of the creditworthiness of a country or a sovereign entity.
The UAE had the most number of rated entities at 44, mostly formed by financial institutions and followed by insurance and infrastructure and project finance. In Saudi Arabia, the number of entities considered was 24, and the bulk of them were financial organizations.
The Chartbook also revealed that more than 60 percent of the rated issuers in the UAE have a stable outlook for 2020. For Saudi Arabia, 90 percent of the rated issuers held a stable outlook.
Financial institutions in the UAE, Saudi Arabia and Kuwait are considered in good health and their creditworthiness is positive. Out of 106 EM sovereigns considered by Moody’s, 31 were investment grade while 75 were sub-investment grade. Also, 74 sovereigns have a stable outlook and 24 reflected a negative bias, the Chartbook said.
However, Moody’s also highlighted the emerging threats and dangers because of the ongoing COVID-19 pandemic.
“The global recession is deepening as coronavirus-related restrictions exact a high economic cost, and we now expect real GDP to contract by 1.0 percent for G-20 emerging market economies in 2020.”
VP and Sr. Credit Officer – Moody’s
“We have already seen a large number of downgrades among high-yield corporates in recent months, reflecting the economic and financial upheaval the coronavirus has inflicted upon emerging markets,” added Mr. Perevezentsev.
Asia Pacific issuers account for 35 percent of all rated EM non-sovereign issuers, with 60 percent from China. A total of 62 percent of the region’s issuers have investment-grade ratings, and 69 percent have stable outlooks – down from 83 percent in September 2019. Negative bias is especially high in India and Vietnam, were respectively 63 percent and 68 percent of ratings carried a negative outlook or were under review for downgrade as of April 30, 2020.