In spite of the looming danger of inflation, higher interest rates, less accommodating debt capital markets, and the potential for an economic downturn, corporate and infrastructure enterprises in the Gulf Cooperation Council area are likely to maintain a robust performance in 2023, according to a recent analysis by S&P Global.
The GCC’s corporate and infrastructure issuers will successfully sail through 2023, according to the US-based credit rating agency, thanks to their steady earnings profiles, solid balance sheets, and advantageous funding and maturity profiles.
“A handful of the firms have larger floating rate exposure, leaving them more vulnerable to potential interest rises, particularly those operating in cyclical industries that may face economic headwinds,” said Tatjana Lescova, a credit analyst at S&P Global.
As a result of improvements in the region’s oil and gas-based economies, S&P Global continued by noting that the operating performance of GCC firms increased in 2022 and was supported by positive rating actions.
“75% of our rating outlooks are stable, while over 20% are positive, reflecting our predictions of resilience for the rated corporate and infrastructure issuers in 2023,” said Sapna Jagtiani, the firm’s credit analyst.
OPEC+ decided in October 2022 to reduce output by 2 million barrels per day, or around 2% of global demand, from November through the end of 2023. According to S&P Global, Brent crude might average $90 per barrel in 2023, before falling to $80 in 2024.
In the years 2023 and 2024, hydrocarbon prices should sustain the region’s oil and gas industry’s inherent credit quality, according to S&P Global Ratings credit analyst Rawan Oueidat.