The change in rating reflects, “increased predictability of policies and decision-making processes affecting non-government issuers given institutional improvements,” the ratings agency said
Credit rating agency Moody’s raised Saudi Arabia’s local and foreign currency rating to ‘Aa1’ from ‘Aa2’ on Friday, citing increased predictability of the government’s decision-making processes affecting the private sector.
For the world’s largest crude exporter, non-oil economic growth is a top priority and the government has accelerated policies to drive investment into tourism and expand the private sector.
The change in rating reflects, “increased predictability of policies and decision-making processes affecting non-government issuers given institutional improvements,” the ratings agency said in a statement.
The “zero-notch gap” between rating for the foreign currency and the local currency is aided by the central bank’s very large foreign-exchange reserve and reflects very low transfer and convertibility risks, Moody’s added.
It, however, attributed reliance on a single revenue source for both the private and the government sector and challenging regional geopolitical dynamics for the “three-notch gap” between the local-currency rating and the ‘A1’ sovereign rating.
Fellow rating agency S&P Global in March affirmed Saudi Arabia’s sovereign rating and outlook betting on social and economic reforms to improve the country’s prospects.
Source: Zawya
