Moody’s Investors Service has announced actions via separate releases on the ratings and outlooks of 18 oil-exporting sovereigns to reflect the impact of the continued large fall in oil prices, which Moody’s expects to remain low for several years.
For 12 sovereigns, the rating agency has initiated reviews for downgrade to assess the full impact of the oil price shock in a systematic and consistent manner. In four cases, Moody’s has downgraded the ratings and placed them on review for further downgrade to reflect the minimum impact that it believes the fall in prices will have on those sovereigns’ credit profiles.
The rating agency aims to conclude all rating reviews within two months. Moody’s has also affirmed the ratings of two further sovereigns but assigned a negative outlook to one of them. The full list of affected sovereigns and the corresponding rating action is provided below.
Moody’s has also published a report to provide further insight into its views and the analytical considerations that drove the rating actions and that will inform its ratings reviews. Subscribers can access this report via a link provided at the end of this press release.
The report, entitled “Oil-Exporting Sovereigns – Global: Key Drivers of Rating Actions on 18 Issuers to Assess Impact of Sharp Fall in Oil Prices”, explains that the continuing fall in oil prices has material, and in some cases quite profound, implications for the economic growth and the balance sheets of sovereigns that rely to a large extent on oil and gas to drive their growth and finance their expenditures. Given the importance of economic and fiscal strength in Moody’s sovereign risk analysis, the rating agency believes that the credit risk profiles of these oil-exporting sovereigns are therefore under increasing pressure.
Moody’s rating reviews will allow it to determine the extent of any ratings adjustments required for these sovereigns or, conversely, the extent to which their economic and fiscal strength, financial buffers and capacity to implement credit-supportive policies insulate them from the impact of the oil price shock.
In January, Moody’s latest oil price forecasts announced a further downward revision of its oil price forecasts for Brent to US$33 per barrel in 2016 and US$38 per barrel in 2017, rising only slowly thereafter to US$48 by 2019.
Below is a list of the 12 oil-exporting sovereigns earmarked for downgrading:
Abu Dhabi(Aa2)
Angola(Ba2)
Gabon(Ba3)
Kazakhstan(Baa2)
Kuwait(Aa2)
Nigeria(Ba3)
Papua New Guinea(B1)
Qatar(Aa2)
Russia(Ba1)
Saudi Arabia(Aa3)
Trinidad & Tobago(Baa2)
United Arab Emirates(Aa2)
Moody’s has downgraded and placed on review for further downgrade the ratings of 4 sovereigns:
Azerbaijan(from Baa3 to Ba1 on review for further downgrade)
Bahrain(from Baa3 to Ba1 on review for further downgrade)
Republic of the Congo(from Ba3 to B1 on review for further downgrade)
Oman(from A1 to A3 on review for further downgrade)
Moody’s has also changed the rating outlook to negative from stable on Venezuela’s Caa3 rating.
Moody’s has affirmed the Aaa stable rating of Norway.
