Good fundamentals to help UAE companies weather global uncertainty: S&P Global Ratings
A. SREENIVASA REDDY (ABU DHABI)Good corporate fundamentals are expected to help UAE companies—and the economy at large—weather the global uncertainty triggered by tariff wars and geopolitical tensions, said S&P Global Ratings in a new report.In its latest analysis of the GCC corporate landscape, the report said that despite challenges stemming from rising trade protectionism, oil price volatility, and global economic fragmentation, the UAE remains one of the more resilient economies in the region. Its large, investment-grade-rated corporate base, access to competitively priced capital, and diversified economic base continue to provide a cushion against external shocks.S&P Global Ratings forecasts that the UAE's real GDP will grow by approximately 4.5% in 2025 and slightly above 4% in 2026. This places the country among the fastest-growing economies in the GCC. Growth is expected to be supported by ongoing expansion in the non-oil economy, including sectors such as tourism, real estate, retail, and logistics. The report cites strong domestic demand trends as a key driver, helped by structural reforms and continued investor confidence.Inflation across the GCC, including in the UAE, is projected to remain moderate at around 2% in 2025.The S&P Global Ratings reports that 61% of rated companies in the GCC hold investment-grade ratings, with a significant portion of them based in the UAE. These companies are viewed as having robust liquidity profiles, solid operating models, and prudent capital allocation strategies.Among the prominent UAE-based corporates covered in the report are Emirates Telecommunications Group (e&), which carries a rating of AA-/Stable; Emaar Properties, rated BBB+/Stable; Majid Al Futtaim Holding, at BBB/Stable; and Fertiglobe PLC, also rated BBB/Stable.The report also highlights that 46% of rated GCC corporates are government-related entities (GREs), which further strengthens the financial system. These entities benefit from state ownership, preferential access to resources, or contractual relationships with public institutions—characteristics that enhance creditworthiness. In the UAE, this relationship between government and enterprise has helped preserve financial stability and enabled corporates to pursue expansion strategies with confidence.Real estate remains a major pillar of strength in the UAE's economy. According to the report, residential demand in Dubai is expected to remain firm in 2025, supported by demographic growth and a strong pipeline of project launches. Pre-sales and revenue backlogs have provided companies with cash flow visibility, while developers continue to maintain strong balance sheets. Despite the potential for short-term corrections due to new supply, leading players in the sector are expected to remain profitable and resilient.S&P also pointed to continued momentum in the chemicals and telecommunications sectors. Fertiglobe, the UAE-headquartered nitrogen fertiliser producer, benefits from competitively priced gas feedstock, offering a cost advantage over global peers. In telecommunications, Emirates Telecommunications Group has been expanding into new verticals, including digital platforms and cloud services. The agency noted that while capital expenditure remains elevated in the sector, companies such as e& have the financial headroom to support ongoing investment without eroding credit quality.UAE corporates are expected to maintain solid access to financing, even in an environment of elevated global interest rates. S&P estimates that capital expenditure among rated GCC companies will remain between $30 billion and $35 billion annually. In the UAE, companies such as Emaar, Majid Al Futtaim, and e& have demonstrated strong refinancing capabilities and continue to benefit from favourable terms in both local and international capital markets. The report anticipates that many of these firms will return to bond markets in 2025 to refinance debt and support new projects.
While the report does outline potential downside risks—including prolonged trade disruptions, weaker oil prices, and regional security concerns—it emphasises that UAE-based corporates are generally well-prepared. 'While rising uncertainty clouds the global outlook, the credit quality of most rated GCC corporates—particularly in the UAE—remains strong,' the report said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
an hour ago
- Khaleej Times
S&P affirms 'AA+' credit rating for US, cites impact of tariff revenue
S&P Global on Monday affirmed its "AA+" credit rating on the US, saying the revenue from President Donald Trump's tariffs will offset the fiscal hit from his massive tax-cut and spending bill. Trump signed the "One Big Beautiful Bill Act" into law in July after it was passed by the Republican-controlled Congress. The bill, which delivered new tax breaks, also made Trump's 2017 tax cuts permanent. "Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending," S&P said in a statement. "At this time, it appears that meaningful tariff revenue has the potential to offset the deficit-raising aspects of the recent budget legislation." The U.S. reported a $21 billion jump in customs duty collections from Trump's tariffs in July, but the government budget deficit still grew nearly 20% in the same month to $291 billion. Interest on the public debt also continued to grow, hitting $1.013 trillion in the first 10 months of the fiscal year, an increase of 6%, or $57 billion, over the prior-year period due to slightly higher interest rates and increased debt levels. Since returning to power in January this year, Trump has launched a global trade war with a range of tariffs that have targeted individual products and countries. The Republican president has set a baseline tariff of 10% on all imports to the U.S., as well as additional duties on some items and trading partners. IMPACT OF TARIFFS S&P, which became the first ratings agency to cut the pristine U.S. government rating in 2011, said the outlook on the U.S. rating remains stable. The ratings agency said it expects the Federal Reserve, which Trump has criticized this year for not cutting interest rates, "to navigate the challenges of lowering domestic inflation and addressing financial market vulnerabilities." It projected the country's general government deficit to average 6.0% of GDP during the 2025-2028 period, down from 7.5% in 2024 and from an average 9.8% of GDP in 2020-2023. S&P said it could lower the rating over the next two to three years if already high deficits increase. "The ratings could also come under pressure if political developments weigh on the strength of American institutions and the effectiveness of long-term policymaking or independence of the Federal Reserve," it said. SP, however, said it could raise the U.S. rating in the event of sustained economic growth and adjustments to the U.S. fiscal profile that would diminish recent increases in the country's debt burden. There was no reaction in markets on Tuesday to SP's credit rating affirmation, which follows a U.S. sovereign credit downgrade by Moody's in May, when that ratings agency cut the triple-A U.S. rating by one notch, citing rising debt levels. The U.S. national debt load surged above a record $37 trillion last week. James Ragan, co-chief investment officer and director of investment management research at D.A. Davidson, said the SP rating affirmation was an acknowledgment of the meaningful tariff revenue generated so far. "That's all good revenue (coming) in, but that's also a drag on the economy, so I think we don't know the impact of that going forward," he said.
Khaleej Times
an hour ago
- Khaleej Times
UAE ambassador to Pakistan Hamad Alzaabi concludes tenure
Hamad Obaid Alzaabi has concluded his tenure as the UAE Ambassador to Pakistan. To mark the occasion, Pakistan's President Asif Ali Zardari met with the outgoing ambassador in Islamabad, extending his best wishes for Alzaabi's future endeavors. 'Asif Ali Zardari, President of the Islamic Republic of Pakistan, received Hamad Obaid Alzaabi, Ambassador of the United Arab Emirates in Islamabad, at Aiwan-e-Sadr to bid him farewell at the conclusion of his tenure in Pakistan, and extended best wishes for his future endeavors,' the UAE Embassy in Islamabad said in a post on X. The embassy also shared a photo of the two dignitaries during the farewell meeting. Take a look: H.E. Asif Ali Zardari, President of the Islamic Republic of Pakistan, received H.E. Hamad Obaid Alzaabi, Ambassador of the United Arab Emirates in Islamabad, at Aiwan-e-Sadr to bid him farewell at the conclusion of his tenure in Pakistan, and extended best wishes for his futureâ�¦ — UAE Embassy PK (@uaeembassyisb) August 19, 2025 Ambassador Alzaabi officially assumed his post in Pakistan on September 19, 2017. He began his diplomatic career in 2004 as an Attaché with the UAE's Diplomatic and Consular Corps and later served at the UAE Permanent Mission to the United Nations in New York. During his tenure in Pakistan, bilateral relations between the two nations significantly deepened across various sectors, including economic, cultural, social, diplomatic, and political domains. According to the UAE Ministry of Foreign Affairs, 'The UAE is one of the largest investors in Pakistan, and bilateral trade has been steadily growing over the years, with people-to-people ties also continuously strengthening.'
Arabian Business
2 hours ago
- Arabian Business
Dubai's Wasl offers first-time buyers rare chance with new South Garden homes
A new Dubai real estate development will offer first-time buyers priority access to homes in its latest project. In line with the Dubai First-Time Home Buyer (FTHB) program, a substantial share of the newly released residential units in South Garden Buildings D and E will be reserved for eligible first-time buyers. The move underscores Wasl's contribution to the initiative and supports the Dubai Real Estate Strategy 2033, which aims to boost homeownership rates across the emirate. First-time property buyers in Dubai The new release follows the rapid 48-hour sellout of South Garden's initial phase in 2024. Buildings D and E will add a curated selection of studios, one-, two-, and three-bedroom apartments at Wasl Gate, a freehold master development in Jebel Ali. Strategically located with direct Metro access and close to Festival Plaza Mall, the project combines connectivity and tranquillity. Amenities include a private gated zen garden, reflecting Wasl's commitment to delivering communities that offer long-term value for both residents and investors. As part of its partnership with the Dubai Land Department (DLD) and the Dubai Department of Economy and Tourism (DET), Wasl will provide registered first-time buyers with exclusive early access to units, along with tailored incentives such as discounted pricing. While some units will be allocated to the wider public, demand is expected to be strong given the project's track record of rapid sellouts. Mohamed Al Bahar, Director of Business Development at Wasl Group, said: 'The fact that so many are choosing to buy their first home through Wasl speaks volumes. It reflects not only the strength of our communities, but the trust we've earned to deliver quality, opportunity and value in a competitive market. 'With this launch, we're reaffirming our role as a developer of purpose, supporting Dubai's evolving housing needs while giving first-time buyers a real chance to step onto the property ladder.' The South Garden expansion highlights Wasl's ongoing role in shaping Dubai's property market and its commitment to fostering greater homeownership opportunities across the city.
