In The Amidst Of Economic Challenges, Gulf Companies And Infrastructure Firms Remain Resilient

A recent economic report underscores the robust credit conditions bolstering most companies and infrastructure entities across the Gulf region, despite prevailing global economic challenges, heightened interest rates, and geopolitical uncertainties in the Middle East.

S&P Global Ratings forecasts that the majority of Gulf companies and infrastructure entities will maintain their credit flexibility in 2024, despite the global economic slowdown and escalating interest rates, as reported by Al-Qabas daily.

Rawan Oweidat, a credit analyst at S&P, anticipates sustained growth in EBITDA and capital expenditures, driven by ambitious economic development plans. This growth is poised to uphold credit metrics for companies, possibly leading to slight improvements. Refinancing risks, especially for government-related entities, are deemed manageable, given their substantial debt due in 2024 and robust credit ratings.

In 2024, Oil, Gas, and Chemical Companies are expected to witness a profit resurgence, while non-oil sector profits may grow at a more moderate pace compared to the previous year, as highlighted by Tatjana Laskova, another credit analyst at the agency.

Sofia Bensaid, the credit analyst, predicts an upsurge in decarbonization initiatives post the COP28 Conference of the Parties, prompting infrastructure issuers to seek refinancing in financial markets. Despite market risks, Gulf infrastructure assets are projected to remain resilient, benefiting from long-term concessions that effectively mitigate risks.

The overall credit ratings outlook for Gulf companies and infrastructure entities remains stable for 2024, indicating their resilience. However, limited credit rating upgrades are expected, with potential pressures on companies in cyclical sectors and those undergoing significant investments leading to higher leverage. Additionally, companies reliant on consumer confidence may face challenges due to high geopolitical risks.

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