Saudi Arabia was upgraded to A+ from A by Fitch. The upgrade reflects Saudi’s strong fiscal and external balance sheets, with government debt-to-GDP and sovereign net foreign assets considerably stronger than both the A and AA medians. Saudi Arabia has one of the highest reserve coverage ratios and its foreign reserves are strong at $459bn. Its gross government debt-to-GDP declined to 23.8% in 2022 and is expected to stay below 30% through 2024-2025 and it also has a balanced budget. Fitch expects its non-oil private sector to witness real growth of 5% in 2023 although its overall oil dependence remains its rating weakness. However they note that Saudi’s oil revenue will account for around 60% of total budget revenue in 2023-2024, down from 90% ten years ago. Fitch also noted that Saudi’s fiscal backdrop was improving and that it has visibility in its future returns adding to its positives.
Saudi Arabia’s dollar bonds were trading slightly higher with its 5% 2053s up 0.7 points to 95.45, yielding 5.31%.