Dubai - Mubasher:"Large Government-Related Entities (GREs) in the GCC with important mandates are better positioned to withstand low oil prices," S&P Global Ratings said in a report issued on Saturday.

It also considers the structural shift in the energy markets now well and truly established, and GCC governments on a path to addressing the fiscal deficits through various forms of expenditure reform.

In 2016, S&P downgraded 8 corporate and infrastructure GREs on the back of sovereign rating actions, and took negative rating actions on 5 companies that are directly exposed to the hydrocarbon industry.

“As we look forward, corporate and infrastructure companies most able to operate successfully and deal with the implications of the reform agenda, like higher taxes and lower subsidies, will be best able to wade out the transformational market changes that are occurring,” the report indicated.

These are likely to be the large GREs with important mandates in the oil and gas, utilities, and telecom sectors, and private corporate and infrastructure companies that are leaders in their respective fields, which have adopted conservative funding strategies and are not dependent on subsidies and government hand-outs for their operations, it explained.

“We have not yet seen a trend for governments to prompt their GREs to lever up to increase shareholder distribution, and this has been a key underpinning to rating performance.”

“The fact that about two-thirds of our rated corporate and infrastructure ratings are GREs explains the dominance of stable rating outlooks despite the economic headwinds,” added the report.

S&P updated economic projections for the GCC reflect aggregate GDP growth of about 2% for 2016 and 2017, similar to growth levels in 2015. The rating agency assumes Brent crude will average $45 per barrel in 2017, $50 in 2018, and $55 for 2019 and beyond,” the report concluded.