Fitch affirms UAE’s rating at 'AA-', outlook stable
Fitch has affirmed ‘AA-’ rating for the UAE with a stable outlook, based on the Emirate’s strong external asset position and a high GDP per capita.
Abu Dhabi’s sovereign net foreign assets, which accounted for 122% of the UAE GDP in 2023, have further elevated the country’s position, which is among the highest of Fitch-rated sovereigns.
Fitch projects the consolidated budget for the UAE to remain in surplus in 2024 at 4.1% of GDP after 7.8% in 2023, with surpluses in Dubai and Abu Dhabi, which received a ‘AA’ rating a day earlier, along with budget deficits in Ras Al Khaimah and Sharjah.
“We forecast consolidated UAE government debt at 24% of GDP at end-2024, well below the ‘AA’ category median of 49%,” Fitch noted, saying it will be broadly stable in 2025 and 2026.
“Individual emirates have varied debt profiles, with Sharjah standing out with a higher debt burden,” Fitch added, with Dubai having repaid 29 billion UAE dirhams ($7.9 billion), or 1.5% of the UAE GDP, in market and private debt in 2023, and Emirates NBD Bank PJSC’s loans to the Dubai government fell as well.
According to Fitch, the UAE’s strengths are balanced by weak governance indicators relative to rating peers, the country’s high dependence on hydrocarbon income and the significant leverage of GREs.
Despite a moderate government debt/GDP ratio, Fitch said it views the UAE as characterised by high leverage in its economy. “We estimate overall contingent liabilities from GREs [government-related entities] of the emirates and the FG [federal government] at about 62% of UAE 2023 GDP and gross non-bank private external debt stands at 46% of GDP,” it said.
Fitch further forecasts overall GDP growth to slow to 3.1% in 2024 and pick up to 4.9% in 2025 after 3.6% in 2023.
“We expect non-oil growth of 4.3% and hydrocarbon GDP to contract by 0.4% in 2024 as average oil production in 2024 will contract despite the loosening of OPEC+ quotas in 2H24. We project non-oil growth to slow to 3.4% in 2025 but remain relatively robust despite global headwinds, supported by government and GRE spending, a robust real estate sector, dynamic past population growth and GCC demand. The hydrocarbon sector will expand by 9.5% in 2025 due to higher OPEC+ production caps,” Fitch said.
Security risks also remain on a geopolitical level with tensions between Iran and Israel and the US that Fitch said were a risk to the region, in particular to Abu Dhabi’s hydrocarbon infrastructure and to Dubai as a trade, tourism and financial hub.
Thursday, 27 June 2024
Major Gulf markets gain on firm oil prices, Egypt outperforms | Reuters
Major Gulf markets gain on firm oil prices, Egypt outperforms | Reuters
Major Gulf indexes closed higher on Thursday, as oil prices gained on worries that a potential expansion of the Gaza war might disrupt Middle East supplies.
Egypt's market remains on a positive trend as it continues to see resistance near last month's highs, said Joseph Dahrieh, managing principal at Tickmill, but "at the same time, the ongoing energy crisis could continue to exert pressure on economic and industrial activity and could weigh on the stock market if it exacerbates".
Major Gulf indexes closed higher on Thursday, as oil prices gained on worries that a potential expansion of the Gaza war might disrupt Middle East supplies.
Oil price - a key catalyst for Gulf's financial markets - was up 0.63% to $85.79 a barrel by 1200 GMT.
Saudi Arabia's benchmark stock index (.TASI), opens new tab, which recorded its first monthly gain after three months of consecutive losses, advanced 0.6%, helped by a 10% surge in Al Taiseer Group TALCO Industrial (4143.SE), opens new tab and a 2.2% increase in biggest lender Saudi National Bank (1180.SE), opens new tab.
Amid the gainers, renewable energy utility firm Acwa Power (2082.SE), opens new tab jumped 2.9% after the firm signed three power purchase agreements with Saudi Power Procurement Company for large-scale solar plants with a total capacity of 5.5 gigawatts, the firm said in a filing. The agreements are worth 12.3 billion riyals ($3.28 billion).
Amid the gainers, renewable energy utility firm Acwa Power (2082.SE), opens new tab jumped 2.9% after the firm signed three power purchase agreements with Saudi Power Procurement Company for large-scale solar plants with a total capacity of 5.5 gigawatts, the firm said in a filing. The agreements are worth 12.3 billion riyals ($3.28 billion).
Abu Dhabi's benchmark index (.FTFADGI), opens new tab settled 0.4% higher, snapping two sessions of losses, with Abu Dhabi biggest real estate developer Aldar Properties (ALDAR.AD), opens new tab rising 1.7% and IHC-owned investment firm Multiply Group (MULTIPLY.AD), opens new tab rising 1.5%.
The Qatari benchmark index (.QSI), opens new tab rose 0.9%, extending gains to the 18th session in a row, supported by a rise in energy and financial sector stocks with Gulf's largest lender Qatar National Bank (QNBK.QA), opens new tab increasing 0.4% and Qatar Gas Transport (QGTS.QA), opens new tab hiking 3.7%.
The Qatari benchmark index (.QSI), opens new tab rose 0.9%, extending gains to the 18th session in a row, supported by a rise in energy and financial sector stocks with Gulf's largest lender Qatar National Bank (QNBK.QA), opens new tab increasing 0.4% and Qatar Gas Transport (QGTS.QA), opens new tab hiking 3.7%.
The Qatari index has risen in all sessions this month, posting its highest monthly gain this year, according to LSEG data.
Dubai's main index (.DFMGI), opens new tab ended 0.1% higher with blue-chip developer Emaar Properties (EMAR.DU), opens new tab climbing 1.6% and Emirates Central Cooling Systems Corporation (EMPOWER.DU), opens new tab rising 0.7%.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab rose for a third consecutive session and gained 1% with Commercial International Bank (COMI.CA), opens new tab adding 1.9% and EFG Holding (HRHO.CA), opens new tab jumping 4.6%.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab rose for a third consecutive session and gained 1% with Commercial International Bank (COMI.CA), opens new tab adding 1.9% and EFG Holding (HRHO.CA), opens new tab jumping 4.6%.
Egypt's market remains on a positive trend as it continues to see resistance near last month's highs, said Joseph Dahrieh, managing principal at Tickmill, but "at the same time, the ongoing energy crisis could continue to exert pressure on economic and industrial activity and could weigh on the stock market if it exacerbates".
Fitch affirms #AbuDhabi’s rating at ‘AA’, with a stable outlook
Fitch affirms Abu Dhabi’s rating at ‘AA’, with a stable outlook
Fitch Ratings has affirmed Abu Dhabi’s rating at ‘AA’ with a stable outlook, reflecting the emirate’s strong fiscal position and high GDP per capita.
Abu Dhabi’s government debt, which stood at 15% of projected 2024 GDP in June, was among the lowest of Fitch-rated sovereigns, with sovereign net foreign assets (SNFA) among the highest, at 225% of GDP at end-2023 ($672 billion), up significantly from end-2022 due to strong global stock markets.
“We forecast Abu Dhabi will run fiscal surpluses of 5.4% of GDP in 2024 and 3.6% in 2025, after our estimate of 11% of GDP in 2023,” Fitch said.
Oil production is also forecast to rise, in line with OPEC+’s June agreement to reach 3.375 million barrels per day by December 2025, which Fitch said was still well below Abu Dhabi’s stated production capacity of 4.85 million barrels per day. This will also partly offset lower Brent oil prices, which Fitch projects to average $70 per barrel in 2025 and $65 in 2026.
Spending is projected to remain contained within a target band of 260 billion to 300 billion UAE dirhams ($68 billion to $81.67 billion), with the majority of Abu Dhabi’s capital spending undertaken by state-owned enterprises.
Constraints have been raised from “a high dependence on hydrocarbons, a relatively weak but improving economic policy framework and low governance indicators compared with peers,” Fitch said.
Fitch Ratings has affirmed Abu Dhabi’s rating at ‘AA’ with a stable outlook, reflecting the emirate’s strong fiscal position and high GDP per capita.
Abu Dhabi’s government debt, which stood at 15% of projected 2024 GDP in June, was among the lowest of Fitch-rated sovereigns, with sovereign net foreign assets (SNFA) among the highest, at 225% of GDP at end-2023 ($672 billion), up significantly from end-2022 due to strong global stock markets.
“We forecast Abu Dhabi will run fiscal surpluses of 5.4% of GDP in 2024 and 3.6% in 2025, after our estimate of 11% of GDP in 2023,” Fitch said.
Oil production is also forecast to rise, in line with OPEC+’s June agreement to reach 3.375 million barrels per day by December 2025, which Fitch said was still well below Abu Dhabi’s stated production capacity of 4.85 million barrels per day. This will also partly offset lower Brent oil prices, which Fitch projects to average $70 per barrel in 2025 and $65 in 2026.
Spending is projected to remain contained within a target band of 260 billion to 300 billion UAE dirhams ($68 billion to $81.67 billion), with the majority of Abu Dhabi’s capital spending undertaken by state-owned enterprises.
Constraints have been raised from “a high dependence on hydrocarbons, a relatively weak but improving economic policy framework and low governance indicators compared with peers,” Fitch said.
Saint-Gobain agrees to buy #Dubai-based FOSROC for around $1bln
Saint-Gobain agrees to buy Dubai-based FOSROC for around $1bln
France's Saint-Gobain has entered into an agreement to buy Dubai-based construction chemicals company FOSROC for around 960 million euros ($1.03 billion) to drive its international expansion, it said on Thursday.
The transaction, which will be fully financed with cash, is expected to close by the first half of 2025, the French construction materials group said.
Saint-Gobain has been on the hunt for acquisitions outside of Europe as it seeks to grow its worldwide presence in construction chemicals.
Since 2021, the Paris-based multinational has bought 35 companies, including Chryso and GCP that operate in the sector.
The deal to buy FOSROC, based in the United Arab Emirates, will allow the group to expand in high-growth markets such as India and the Middle East, CEO Benoit Bazin said in a statement.
Saint-Gobain expects to realise synergies of $54 million in the third year after the deal is completed.
France's Saint-Gobain has entered into an agreement to buy Dubai-based construction chemicals company FOSROC for around 960 million euros ($1.03 billion) to drive its international expansion, it said on Thursday.
The transaction, which will be fully financed with cash, is expected to close by the first half of 2025, the French construction materials group said.
Saint-Gobain has been on the hunt for acquisitions outside of Europe as it seeks to grow its worldwide presence in construction chemicals.
Since 2021, the Paris-based multinational has bought 35 companies, including Chryso and GCP that operate in the sector.
The deal to buy FOSROC, based in the United Arab Emirates, will allow the group to expand in high-growth markets such as India and the Middle East, CEO Benoit Bazin said in a statement.
Saint-Gobain expects to realise synergies of $54 million in the third year after the deal is completed.
#SaudiArabia leads Gulf bourses higher, #Dubai falls | Reuters
Saudi Arabia leads Gulf bourses higher, Dubai falls | Reuters
Major Gulf bourses rose in early trading on Thursday, with Saudi Arabia leading the gains buoyed by surge in shares of top utility firm Acwa Power Company (2082.SE), opens new tab, while the Dubai index declined.
Saudi Arabia's benchmark stock index (.TASI), opens new tab advanced 0.7%, helped by a nearly 5% surge in Acwa Power and a 0.9% increase in biggest Islamic lender Al Rajhi Banking and Investment Corporation (1120.SE), opens new tab.
Major Gulf bourses rose in early trading on Thursday, with Saudi Arabia leading the gains buoyed by surge in shares of top utility firm Acwa Power Company (2082.SE), opens new tab, while the Dubai index declined.
Saudi Arabia's benchmark stock index (.TASI), opens new tab advanced 0.7%, helped by a nearly 5% surge in Acwa Power and a 0.9% increase in biggest Islamic lender Al Rajhi Banking and Investment Corporation (1120.SE), opens new tab.
Acwa Power signed three power purchase agreements with Saudi Power Procurement Company for large-scale solar plants with a total capacity of 5.5 gigawatts, the firm said in a filing. The agreements are worth 12.3 billion riyals ($3.28 billion).
Abu Dhabi's benchmark index (.FTFADGI), opens new tab rose 0.3%, snapping two sessions of losses, lifted by a 0.6% gain in UAE's largest listed firm International Holding Company (IHC.AD), opens new tab and a 1.5% rise in IHC-owned investment firm Multiply Group (MULTIPLY.AD), opens new tab.
Abu Dhabi's benchmark index (.FTFADGI), opens new tab rose 0.3%, snapping two sessions of losses, lifted by a 0.6% gain in UAE's largest listed firm International Holding Company (IHC.AD), opens new tab and a 1.5% rise in IHC-owned investment firm Multiply Group (MULTIPLY.AD), opens new tab.
Oil price - a key catalyst for Gulf's financial markets - edged higher on Thursday on worries that a potential expansion of the Gaza war might disrupt Middle East supplies.
Brent crude was up 0.3% to $85.51 a barrel by 0804 GMT.
Brent crude was up 0.3% to $85.51 a barrel by 0804 GMT.
The Qatari benchmark index (.QSI), opens new tab was up 0.3%, extending gains to the 18th session in a row, with Gulf's largest lender Qatar National Bank (QNBK.QA), opens new tab up 0.1% and petrochemical maker Industries Qatar (IQCD.QA), opens new tab rising 0.2%.
The Qatari index has risen in all sessions this month, posting its highest monthly gain this year, according to LSEG data.
Dubai's main index (.DFMGI), opens new tab edged down 0.04%, pressured by a 0.7% drop in Emirates Central Cooling Systems Corporation (EMPOWER.DU), opens new tab and 0.3% decline in top lender Emirates NBD Bank (ENBD.DU), opens new tab.