Moody's downgrades #Kuwait on liquidity squeeze, weak governance | Reuters

Moody's downgrades Kuwait on liquidity squeeze, weak governance | Reuters:

Moody’s downgraded Kuwait’s rating citing higher liquidity risks and weaker governance and institutional strength, as the Gulf state, battered by low oil prices, struggles to pass a law allowing it to issue international debt.

“In the continued absence of legal authorization to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund, available liquid resources are nearing depletion, introducing liquidity risk despite Kuwait’s extraordinary fiscal strength,” the rating agency said.

Moody’s Investor Service downgraded Kuwait by two notches to A1 from Aa2.

When Kuwait last issued debt in the international markets in 2017, its bonds traded close to paper issued by Abu Dhabi, considered the safest credit in the region, as a vast oil-driven financial wealth gave investors confidence.