Moody's affirms UAE's Aa2 rating; maintains stable outlook

Rating supported by assumption of unconditional support from Abu Dhabi for the federal government

  
Dubai marina futuristic buildings. Image used for illustrative purpose.

Dubai marina futuristic buildings. Image used for illustrative purpose.

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Moody's Investors Service has affirmed the Aa2 long-term issuer rating of the UAE Government and maintained outlook at stable.

The agency said the rating affirmation is supported by the relatively muted impact of the pandemic on the federal government's fiscal strength, in part the result of an effective government policy response to the pandemic.

While limited transparency and geopolitical risks constrain creditworthiness, the UAE's rating is supported by Moody's assumption of unconditional support from Abu Dhabi for the federal government, Moody’s said in a note.

The stable outlook reflects broadly balanced risks, consistent with the stable outlook on the Abu Dhabi sovereign rating.

The country’s progress on vaccination roll-out, among the best in the world,  should support the economic recovery, limiting the impact of the pandemic on the UAE's credit metrics, “although the pace of the recovery in key sectors will vary, with trade and potentially tourism likely to recover before air passenger transportation.”

(Writing by Brinda Darasha; editing by Seban Scaria)

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