Rating agencies warn oil slump could trigger blizzard of downgrades - Reuters

Rating agencies warn oil slump could trigger blizzard of downgrades - Reuters:

The world’s top rating agencies said on Tuesday that the sharp drop in oil prices, if sustained, could cause a wave of sovereign downgrades as well as heavy multi-notch rating cuts to junk-rated oil and gas firms.

Fitch’s top Middle East and Africa sovereign analyst, Jan Friederich, told Reuters that with oil prices dropping as low as $31 a barrel this and likely to stay low, countries from Saudi Arabia, Iraq and Oman to Nigeria and Angola were all in focus.

“Countries that are in a somewhat vulnerable external position and have a fixed exchange rate are of course particularly vulnerable,” Friederich said.

On individual countries, he said Saudi Arabia’s financial reserves and its sovereign wealth fund provided a buffer but that there was not “infinite leeway” in the country’s A (stable) rating for the buffers to disappear.