The rating agency said that GCC sovereigns have high exposure to regional geopolitical risks.
Moody’s has affirmed its Aa2 issuer rating of the UAE, which is supported by the full backing of the Government of Abu Dhabi and the Federal Government’s strong balance sheet.
In a statement, Moody’s said that its credit view of the UAE reflects a very high economic strength with exceptionally high GDP per capita, a very large hydrocarbon endowment as well as strong growth rates and a return to consolidated UAE budget surpluses.
Additionally, the rating agency affirmed its Aa2 rating of Kuwait, which reflects the country's exceptionally high wealth levels as well as its substantial hydrocarbons reserves.
In a statement, the rating agency stated that Kuwait's institutional strength score of ‘moderate’ is supported by its strong track record of effective, credible fiscal and monetary policy, stable inflation levels as well as the rising level of government debt and vast sovereign wealth fund assets.
Similarly, Moody’s affirmed A1 rating of Saudi Arabia, which is underpinned by the Kingdom's very high economic strength, reflecting its large economy with significant reserves of crude oil and very high per capital income.
The Kingdom's main rating constraint is its moderate susceptibility to event risk, driven by political risk arising from regional geopolitical conflicts in which Saudi Arabia plays an important role, added Moody’s.
Moody’s also affirmed B2 issuer ratings of Bahrain, supported by the sovereign's high-income levels and fairly diversified economy with still robust growth dynamics.
Bahrain’s liquidity risk is driven by high borrowing requirements in an environment of tightening global liquidity, though access to funding from other GCC members mitigate some of the risks, Moody’s said.
Last year in October, Bahrain secured $10 billion financial aid from Saudi Arabia, the UAE, and Kuwait to relieve pressure in currency and debt markets as well as adjusting its finances, which were hit by lower oil prices since 2014.
Moody’s also affirmed Ba1 rating of Oman and according to the rating agency the rating reflects its assessments of the Sultanate’s moderate economic strength which balances very high-income levels with high reliance on the hydrocarbon sector.
According to Moody’s oil accounts for over 30 per cent of Oman’s GDP and around 60 per cent it's of exports.