Moody’s says 8 GCC government-related issuers face potential downgrade

Eight major government-related entities in the Gulf Cooperation Council have been placed on review for a potential ratings downgrade by Moody’s Investors Service.

They include Etisalat, International Petroleum Investment Company and Mubadala from the United Arab Emirates, SABIC, Saudi Electricity Company and Saudi Telecom Company from Saudi Arabia and Qatari companies Industries Qatar and Qatar Petroleum.

Moody’s also placed on review for downgrade the ratings of Qatari Diar Finance and the ratings on the notes issued by 1MDB Energy Limited, it said on Tuesday.

The move comes after the agency placed on review for downgrade the sovereign ratings of Saudi Arabia, Qatar, the UAE and the emirate of Abu Dhabi on March 4.

Moody’s said ratings of the companies were placed on review because of their credit linkages to their respective economies and governments.

“The reviews will assess the credit implications on each of the government-related issuers of the conclusion of the review for downgrade on the bond ratings of their respective governments and the governments’ support and dependence assumptions,” the agency said.

They will also verify the impact of a weakening economic environment on the companies’ business profiles, given the potential pressure of continued low oil prices on their baseline credit assessments, it added.

Moody’s said its reviews will also take into account planned actions that the respective governments could take to finance their budget deficits and the consequential impact for the issuers.

Meanwhile, the agency also confirmed that no ratings action will be taken on Abu Dhabi National Energy Company (TAQA), Qatar Electricity and Water Company and Ooredoo.

Moody’s said the issuers’ ratings can accommodate up to a one-notch downgrade of their respective linked sovereign, based on their baseline credit assessments and their support and dependence assumptions.