Moody’s Investors Service (Moody’s) has affirmed the Abu Dhabi government’s long-term local and foreign currency issuer ratings at Aa2 and kept the outlook stable. 

The ratings agency also affirmed the foreign currency senior unsecured debt rating at Aa2 and the short-term local and foreign currency issuer ratings at P-1.

The affirmation is supported by Moody’s expectation that Abu Dhabi’s balance sheet will remain very strong and its net creditor position very large for the foreseeable future, which provides significant policy buffers and shock absorption capacity. 

The emirate’s economic and fiscal reliance on hydrocarbons exposes it to oil price cycles and a potential acceleration in the global carbon transition. 

However, Abu Dhabi’s hydrocarbon endowment and low cost of production, combined with its balance sheet size and effective institutions, will help mitigate these credit challenges.

Moreover, the stable outlook reflects the expectation that oil prices will remain supportive and the continued improvement in Abu Dhabi’s net creditor position is resilient to “somewhat” lower oil prices, even with ongoing oil production cuts dampening real GDP growth.  

(Editing by Seban Scaria