Moody's upgrades UAE rating outlook from negative to stable

CAIRO- 27 May 2017: Moody's Investors Service has changed the United Arab Emirates' government rating outlook from negative to stable, while its long-term Aa2 issuer rating was affirmed, the global rating agency said in a late Friday report.

The UAE's long-term and short-term foreign-currency bond and deposit ceilings were kept at Aa2 and Prime-1, respectively, and the UAE's long-term local-currency bond and deposit ceilings also remained unchanged at Aa2.

"The affirmation of the Aa2 rating incorporates Moody's view that the government of Abu Dhabi (Aa2 stable), the wealthiest of the seven emirates that compose the UAE, stands fully behind the federal government of the UAE. Accordingly, the rating of the federal government is linked to the credit profile of the government of Abu Dhabi," the report read.

Effective policy response to the low oil price environment via acceleration in the country's reform agenda, expected improvement in the fiscal and current account positions; and the economy's growth and diversification prospects, were the key drivers of the outlook change, the global rating agency said.

The country's consolidated government debt is projected to stabilize at around 20 percent of GDP in 2017-2018, said Moody's, noting that the two emirates of Dubai and Abu Dhabi account for the bulk of the country's general government debt, with Dubai shouldering the largest portion.