TEXT-S&P reports on risks for Middle East, North African sovereigns
May 07 – Standard & Poor’s Ratings Services rates 13 sovereigns in the Middle East and North Africa (MENA) region, all with high political risks and limited monetary policy flexibility that constrain the sovereign credit ratings. This is according to a survey published on May 3, 2012, titled “Political Risk And Monetary Inflexibility Continue To Weigh On MENA Sovereign Ratings,” on the Global Credit Portal.
The nature of political risk differs across the region, and includes domestic political turmoil and succession and geopolitical risk. Institutional transparency and accountability are a further consideration in our assessment of political risk. The limits to monetary policy flexibility in the region stem from fixed or heavily managed exchange rates, compounded by small and underdeveloped capital markets.
Bahrain, Egypt, Jordan, Oman, and Tunisia have negative outlooks, indicating at least a one-in-three chance that we could lower the sovereign ratings in the next one to two years. For all five, the negative outlook reflects our view that we could lower the ratings if political tensions were to escalate and further weaken economic prospects economic prospects or external and fiscal performance.
The ratings on Abu Dhabi, Israel, Kuwait, Lebanon, Morocco, Qatar, Ras Al Khaimah, and Saudi Arabia have stable outlooks, indicating that we currently do not expect to raise or lower the ratings over the 2012-2013 ratings horizon.
The report includes individual sections on the rated sovereigns, and looks at the considerable divergence between the creditworthiness of those MENA sovereigns with a substantial hydrocarbon endowment and those without.