Research Update: Ratings On Saudi Arabia Lowered To 'A+/A-1'; Outlook Remains Negative

We expect the Kingdom of Saudi Arabia's (Saudi Arabia's) general government fiscal deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia's fiscal revenues. Absent a rebound in oil prices, we now expect general government deficits of 10% of GDP in 2016, 8% in 2017, and 5% in 2018, based on planned fiscal consolidation measures. We are therefore lowering our foreign- and local-currency sovereign credit ratings on Saudi Arabia to 'A+/A-1' from 'AA-/A-1+'. Standard&Poor's is converting its issuer credit rating on Saudi Arabia to "unsolicited" following termination by Saudi Arabia of its rating agreement with Standard&Poor's. The

...We expect the Kingdom of Saudi Arabia's (Saudi Arabia's) general government fiscal + deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia's fiscal revenues. Absent a rebound in oil prices, we now expect general government deficits of 10% + of GDP in 2016, 8% in 2017, and 5% in 2018, based on planned fiscal consolidation measures. We are therefore lowering our foreign- and local-currency sovereign credit ratings + on Saudi Arabia to 'A+/A-1' from '##-/A-1+'. Standard & Poor's is converting its issuer credit rating on Saudi Arabia to + "unsolicited" following termination by Saudi Arabia of its rating agreement with Standard & Poor's. The outlook remains negative, reflecting the challenge of reversing the marked + deterioration in Saudi Arabia's fiscal balance. We could lower the ratings within the next two years if the government did not achieve a sizable and sustained reduction...

Research Update