Riyadh – Mubasher: Fitch Ratings has downgraded Saudi Arabian Oil Company's (Saudi Aramco) Long-Term Issuer Default Rating (IDR) to “A” instead of “A+” with a stable outlook, according to Fitch’s recent report.

The assessment of Saudi Aramco's Standalone Credit Profile (SCP) remained unchanged at “aa+”, which sits at the upper boundary of Fitch's rating spectrum for oil and gas companies, and reflects the company's high production, vast reserves, low production costs, strong cash flows and very conservative financial profile.

Moreover, the rating agency has assigned Saudi Aramco’s Short-Term IDR a rating of “F1+”, reflecting the company's strong standalone liquidity position and financial flexibility and is in line with the sovereign short-term rating.

“The sovereign downgrade followed the drone and missile attack on Saudi Aramco's domestic infrastructure on 14 September 2019, which resulted in a short suspension of more than half of the company's oil production,” Fitch said.

The downgrade also considered the rising geopolitical tensions in the region, in addition to the country's continued fiscal deficit, among other factors.

Fitch, which is one of the big three credit rating agencies, expects that the attack will have a very limited impact on Saudi Aramco's operational and financial performance in 2019.

“We have downgraded Saudi Aramco's IDR to 'A' given the rating is capped by that of the sovereign to reflect interdependency between the two and the influence the state exerts on the company through strategic direction, dividends and taxation,” the report highlighted.

It is worth noting that drone attacks took place on two Aramco oil facilities by mid-September, which led to cutting the kingdom’s output by half.