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Moody’s Issues Government of Qatar Credit Opinion | Qatar-America Institute
Introduction: Moody’s is one of three major international credit rating agencies (CRAs) – the other two being S&P and Fitch – that evaluate the Sate of Qatar’s (SoQ) sovereign creditworthiness. These ratings are important for any government’s debt management exercises as they affect the country’s ability to access financing – for fiscal deficits and other external funding needs – through debt capital markets (DCM). Government-related entities (GREs), such as Ooredoo (telecommunications) and Qatar National Bank (QNB), also benefit from the strength of the SoQ’s credit rating as private creditors use the sovereign’s borrowing spreads as a pricing benchmark for GREs looking to sell bonds. In other words, rating upgrades or downgrades can lead to materially higher or lower costs of funding. On large multi-billion-dollar transactions – such as the jumbo bond issued by the SoQ in April 2018 – even marginally higher spreads can translate into accrued interest payments in the millions of dollars. Moody’s uses the following criteria to assess any sovereign issuer’s ability to service its debt: – Economic Strength – Wealth, size, diversification, and long-term potential; – Institutional Strength – Governance, quality of institutions, and policy predictability; – Fiscal Strength – Ability to deploy resources to face current and expected liabilities; – Susceptibility to Event Risk – Risk of sudden risk migration On 13 July 2018, Moody’s changed the outlook on Qatar’s sovereign issuer rating to stable from negative, citing that “Qatar can withstand the economic, financial and diplomatic boycott by the three …