GCC companies are showing strong credit quality, driven by sound economic conditions and robust business models, according to Moody’s Ratings.

The assessment highlights strong financial performance, solid liquidity, and effective financial discipline across many rated GCC firms.

“This translates into good financial performance, strong credit metrics and solid liquidity, which are likely to be sustained over the next 12 months,” said Moody’s Ratings vice-president and senior analyst Mikhail Shipilov.

Moody’s noted that GCC companies have effectively mitigated geopolitical risks through diversified operations, alternative supply routes, and a focus on domestic markets.

The firm highlighted several key findings regarding GCC corporate credit quality. Notably, GCC issuers demonstrate robust financial health, characterised by strong balance sheets, low leverage, and substantial cash reserves.

Total outstanding debt has remained stable at approximately $410 billion in recent years, with projections indicating this trend will continue into 2025.

A significant increase in cash holdings, rising from $125bn in 2019 to $200bn in 2023, was observed, largely attributable to the strong performance of oil, gas, and petrochemical companies.

Favourable macroeconomic conditions, driven by stable oil prices and economic diversification, benefit domestic sectors like real estate, telecoms, and utilities. The UAE’s economy is projected to grow by 3.8 per cent in 2024 and 4.8pc in 2025, while Saudi Arabia is expected to see 3.3pc growth in 2025 and 4.8pc in 2026.

Exporters, particularly national oil and gas companies like Saudi Aramco and QatarEnergy, benefit from strong operational profiles and low production costs, contributing to their sustained performance.

The UAE real estate market continues to thrive, driven by expatriate inflows and positive market sentiment. However, heightened geopolitical tensions remain a key near-term credit risk for the region, Moody’s added.

avinash@gdnmedia.bh

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