Slew of Oil-producing Nations See Downgrades, Reviews for Downgrade as Prices Remain Low

The continued drop in oil prices led Moody’s Investors Service to review the ratings of 18 oil-exporting sovereigns for possible downgrades and adjustments.

The ongoing oil prices rout is causing “material, and in some cases quite profound, implications for the economic growth and balance sheets of sovereigns that rely to a large extent on oil and gas to drive their growth and finance their expenditures,” Moody’s explained in its report, Oil-Exporting Sovereigns—Global: Key Drivers of Rating Actions on 18 Issuers to Assess Impact of Sharp Fall in Oil Prices.

Price forecasts by the ratings agency for Brent oil per barrel dropped to $33 for 2016, $38 per barrel in 2017 and $48 per barrel by 2019.

“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 concluded.

The four countries that were downgraded and placed on review for further downgrades included Azerbaijan and Bahrain, both moving from Baa3 to Ba1; the Republic of the Congo, from Ba3 to B1; and Oman, A1 to A3.

Moody’s placed the following countries on review:
  • Abu Dhabi
  • Angola
  • Gabon 
  • Kazakhstan 
  • Kuwait 
  • Nigeria 
  • Papua 
  • New Guinea
  • Qatar
  • Russia
  • Saudi Arabia
  • Trinidad & Tobago
  • United Arab Emirates
Moody’s also changed the rating outlook to negative from stable on Venezuela’s Caa3 rating, while Norway remained stable with an Aaa rating.

- Nicholas Stern, NACM editorial associate

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