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GCC region has become a ‘Tale of two spheres’: Report

May 2016

May 17, 2016 | 12:55 | Dubai

GCC has become a ‘Tale of two spheres’ with credit ratings on UAE, Qatar and Kuwait remaining  firmly in the Aa category while  those  on  Saudi  Arabia, Oman and Bahrain experiencing free fall  and noting multi-notch  downgrades, noted the Credit Weekly report by Emirates NBD Global Markets & Treasury. That said, investors have already adjusted their expectations to the weakest link level and bond prices no longer gyrate wildly on announcement of rating downgrades. Last week Moody’s downgrades several entities in the region including the sovereigns of Saudi Arabia (to A3), Oman (to Baa1) and Bahrain (to Ba2) which had minimal impact on secondary market trading prices.

Oil prices rising by 5.4% saw firming up of risk appetite. In addition, better than expected result announcements during the week from Emirates Group, Aldar, TAQA etc boosted investor sentiment which encouraged credit spread tightening for the GCC bonds, the report added.

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