MIDEAST STOCKS-Saudi, other debt downgrades may dampen markets – Reuters

11 months ago Comments Off on MIDEAST STOCKS-Saudi, other debt downgrades may dampen markets – Reuters

DUBAI Feb 18 Downgrades of the credit ratings
of three Gulf oil exporters may dampen stock markets in the
region on Thursday, offsetting strength in oil prices and global
equity markets.

Brent oil futures are just above $35.0 a barrel,
having surged more than 7 percent overnight after Iran endorsed
the idea of oil producers capping their output to support
prices. MSCI’s broadest index of Asia-Pacific shares outside
Japan is up 1.7 percent on Thursday morning.

However, Iran did not explicitly say on Wednesday that it
would restrain its own output, and many analysts still doubt
that the agreement will make much difference to oil prices.

So the sharp debt downgrades by Standard & Poor’s may at
least partially negate the positive impact on Gulf investor
sentiment. Saudi Arabia was cut by two notches to A- from A+
stable while Bahrain lost its investment grade status; Oman was
lowered to the last rating above junk status. Qatar’s AA rating
was affirmed.

The downgrades were not surprising to many debt investors,
and the other two major rating agencies, Moody’s and Fitch, have
much higher ratings for Saudi Arabia. But S&P’s action suggests
Riyadh has not convinced all of the investor and analyst
community that its plans to ride out an era of low oil prices
are effective.

(Reporting by Andrew Torchia)

MIDEAST STOCKS-Saudi, other debt downgrades may dampen markets – Reuters}