Ratings agencies have no plans to give the United Arab Emirates or Dubai a credit rating because their governments have not asked to be rated, and their lack of transparency would make a credit assessment difficult, a senior analyst at Fitch said on Tuesday.
There has been speculation in the past year that Dubai might seek a rating, to help with the placement of its international bonds, or that UAE might seek to issue a bond of its own. Some investors' mandates do not allow them to buy unrated bonds. "We don't rate UAE or Dubai, they haven't asked us or anyone else for a rating," Richard Fox, head of Middle East and Africa sovereigns at Fitch, told a Fitch Middle East and North Africa briefing in London. All three major ratings agencies do rate UAE member Abu Dhabi, however. Fitch and Standard & Poor's rate Abu Dhabi AA while Moody's rates it Aa2 and all three ratings have stable outlooks. Ratings agencies can make unsolicited ratings but most are made at the request of a borrower, and those assessments require access to detailed financial information, Fox added.
"Official information (on Dubai and UAE) remains very weak, we've downgraded our coverage," Fox said, adding that neither published detailed external debt or budget performance data. Fox also said Libya has not yet requested a fresh rating, after Fitch withdrew its ratings last year as political unrest spread across the North African country. Fox said that political risk was an issue for many countries in the Gulf region and such concerns could cut their ratings levels by half a notch to a full notch.
"They have a weaker score compared with their peer group on World Bank governance indicators," he said. Most countries in the region have investment grade ratings and stable outlooks from Fitch. Fox said any attack by Israel or the United States on Iran was likely to have negative implications for countries such as Bahrain and Qatar, which host US bases, as well as for Israel itself and for Lebanon, due to the country's pro-Iranian Hezbollah movement.
Expectations of such an attack are rising, according to Dublin-based online exchange Intrade.com, which puts the chances of an attack by the end of the third quarter at more than 40 percent. For Egypt, which has a BB- rating and negative outlook following two downgrades since the ousting of President Hosni Mubarak last year, Fox reiterated comments released late on Monday that falling reserves were a concern and it was important for the country to strike a deal with the International Monetary Fund. Fitch said Egypt's rating was due for review by December, but the review was likely to be done before then, following presidential elections in May.
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