Saturday, 03 June 2023 07:13 GMT

Moody's Upgrades Ratings of Six Saudi Firms, Including Aramco, PIF

(MENAFN) Moody's Investors Service has upgraded the outlook for six firms in Saudi Arabia, including the Public Investment Fund (PIF) and energy giant Aramco, from stable to positive. This follows the country's own positive credit rating upgrade earlier this month. Saudi Basic Industries Corporation (SABIC), Saudi Telecom Co. (stc), the Saudi Power Procurement Co., and the Saudi Electricity Co. also saw their grading increase. The credit rating agency said the upgrade was due to the strength of Saudi Arabia's economy and the credit linkages between the government and the firms.

Moody's report stated that the A1 rating for Aramco reflects its large operational scale, significant downstream integration, and strong financial flexibility due to its low cost structure and low leverage relative to cash flows. These characteristics provide resilience through oil price cycles and mitigate carbon transition risk, which is a material credit consideration for oil and gas companies. SABIC has maintained its strong position in the petrochemical and fertilizer market due to competitively priced domestic feedstock under long-term contracts with Saudi Aramco, which helps mitigate the volatility of its commodity-based activities.

The PIF, which is Saudi Arabia's sovereign wealth fund, was praised for its high-quality investment portfolio, very strong financial profile with low leverage and high interest coverage, and excellent liquidity profile. The fund aims to support the country's economic diversification and transformation under Vision 2030. Moody's ratings upgrade reflects the PIF's strong track record in executing its investment strategy and its ability to manage risks effectively.

Moody's also emphasized that the six firms benefit to varying degrees from international assets and cash flows, but all have significant credit linkages to the Saudi Arabian sovereign and are exposed to the domestic environment, including political, economic, regulatory, and social factors. The rating agency's upgrade of the six firms' outlook from stable to positive is a reflection of Saudi Arabia's improving economic and financial outlook, which is expected to boost the firms' creditworthiness.


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