Research Update: Ratings On Saudi Arabia Lowered To 'A-/A-2'; Outlook Stable

Oil prices have fallen further since our last review of Saudi Arabia in October 2015, and we have cut our oil price assumptions for 2016-2019 by about $20 per barrel. In our view, the decline in oil prices will have a marked and lasting impact on Saudi Arabia's fiscal and economic indicators given its high dependence on oil. We now expect that Saudi Arabia's growth in real per capita GDP will fall below that of peers and project that the annual average increase in the government's debt burden could exceed 7% of GDP in 2016-2019. We are therefore lowering our foreign- and local-currency sovereign credit ratings on Saudi Arabia to 'A-/A-2' from 'A+/A-1'. The stable outlook reflects our expectation that

...Oil prices have fallen further since our last review of Saudi Arabia in October + 2015, and we have cut our oil price assumptions for 2016-2019 by about $20 per barrel. In our view, the decline in oil prices will have a marked and lasting impact on Saudi Arabia's fiscal and economic indicators given its high dependence on oil. We now expect that Saudi Arabia's growth in real per capita GDP will fall below + that of peers and project that the annual average increase in the government's debt burden could exceed 7% of GDP in 2016-2019. We are therefore lowering our foreign- and local-currency sovereign credit ratings + on Saudi Arabia to 'A-/A-2' from 'A+/A-1'. The stable outlook reflects our expectation that the Saudi Arabian authorities + will take steps to prevent any further deterioration in the government's fiscal position beyond our current expectations....

Research Update