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Fitch revises Saudi Arabia's outlook to Negative; affirms 'AA' ratings

Fitch revises Saudi Arabia's outlook to Negative; affirms 'AA' ratings
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Riyadh – Mubasher: Fitch Ratings revised on Saturday the Outlooks on Saudi Arabia's long-term foreign and local currency Issuer Default Ratings (IDR) to Negative from Stable and affirmed the IDRs at 'AA'.

“The issue ratings on Saudi Arabia's senior unsecured foreign and local currency bonds have also been affirmed at 'AA'. The Country Ceiling has been affirmed at 'AA+' and the Short-term foreign currency IDR at 'F1+',” said the ratings agency.

According to Fitch, twin fiscal shocks are forecast to cause a significant deterioration in the fiscal position. Lower oil prices and increased spending associated with the accession of a new king are forecast to widen the general government deficit to 14.4% of GDP in 2015.

“We expect deficit financing to erode Saudi Arabia's substantial buffers, a key support for its rating. Drawing down government deposits at the central bank has accounted for virtually all deficit financing so far in 2015,” said Fitch.

It added that sovereign net foreign assets (SNFA) will remain well above the peer median, but the level and trajectory compare unfavourably with regional peers Abu Dhabi, Kuwait and Qatar.