Moody’s Investors Service has upgraded Qatar’s credit rating, marking the first upgrade since 2007. The upgrade comes as the strong global demand for liquefied natural gas (LNG) enhances the long-term prospects of the Gulf state. Qatar’s credit rating has been raised one level to Aa2, which is its third-highest investment grade. This places Qatar on par with countries like France, South Korea, and one level above the United Kingdom (U.K.).
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In addition to the credit rating upgrade, Moody’s has changed Qatar’s outlook from positive to stable, indicating that another upgrade in the near future is unlikely. S&P Global Ratings rates Qatar at the same level, while Fitch Ratings rates it one step below.
Moody’s analysts, including David Rogovic, attribute the upgrade to Qatar’s improved fiscal metrics, which have been achieved and are expected to be sustained in the medium term. The government’s commitment to fiscal prudence, including the gradual reduction of infrastructure spending, is seen as a contributing factor to the upgrade.
Qatari entities minimally affected by LNG shipment diversions to Europe
Moody’s also acknowledges Qatar’s significant increase in liquified natural gas (LNG) production as a positive factor. As one of the largest exporters of LNG, Qatar is investing billions of dollars to expand its supply capacity by approximately 60 percent over the next three years.
According to the latest report by S&P, the shipment diversions of LNG from Qatar to Europe as a result of Red Sea attacks are expected to have a minimal impact on Qatari entities exposed to the oil and gas sector. S&P’s assessment is based on the fact that the majority of customers for these entities are located in Asia, rather than Europe.
First green bond soon
Furthermore, Qatar’s finance minister, Ali Al Kuwari, has revealed plans to issue the country’s first green bond soon. This bond issuance will mark Qatar’s first external deal in four years and demonstrates its commitment to sustainable finance, according to Bloomberg.
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