Saudi Ministry of Finance, Strongly, Disagrees with S&P's Approach to Ratings' Management

السبت 1437/1/18 هـ الموافق 2015/10/31 م واس
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Riyadh, Muharram 18, 1437, Oct 31, 2015, SPA -- Following today's decision by S&P to downgrade the credit ratings of the Kingdom of Saudi Arabia to A+ with a negative outlook, the Ministry of Finance would like to make it clear that the Agency acted on an unsolicited basis.
The Ministry of Finance strongly disagrees with S&P's approach to ratings management in this particular instance. We consider S&P's credit assessment reactionary, driven by fluid market factors rather than changes in the fundamentals of the sovereign.
In less than a year, the agency has gone from a positive outlook on the AA- rating to a negative outlook on the A+ rating, on the back of changes in the global oil price dynamics.
We believe that S&P's decision was not only rushed, but analytically inconsistent with the idea of ratings being a medium-term tool meant to look through the cycle while assessing creditworthiness. This opinion is further reinforced by the vast difference in approach and credit view demonstrated by the other agencies.
In the meantime, the Kingdom's fundamentals remain strong with the sovereign's net asset position well in excess of 100% of GDP and backed by substantial foreign exchange reserves. The Kingdom's economy also continued to grow in real terms at a rate above peers despite the environment of weak commodity prices, while a thorough fiscal consolidation plan has been announced to ensure that existing buffers remain sufficiently large.
02:11 LOCAL TIME 23:11 GMT