Latest news with #ZahabiaGupta
Khaleej Times
20-05-2025
- Business
- Khaleej Times
UAE's domestic debt market issuance to hit Dh66.1b in 2025
The UAE is accelerating efforts to deepen its domestic debt capital market, with Abu Dhabi and the federal government set to issue over Dh29.4 billion ($8 billion) in local currency debt in 2025, according to S&P Global Ratings. This strategic push aims to build a robust domestic yield curve, reduce reliance on volatile international markets, and foster financial resilience across the emirates. S&P Global Ratings projects that the UAE federal government and individual emirates will collectively issue approximately Dh66.1 billion ($18 billion) in local currency debt this year, a slight dip from Dh69.7 billion ($19 billion) in 2024. 'About 55 per cent of this will refinance or roll over maturing debt,' said S&P analyst Zahabia Gupta. Among the rated emirates — Abu Dhabi, Ras Al Khaimah, and Sharjah — only Sharjah is expected to issue debt to address a fiscal deficit, projected at 6.3 per cent of GDP in 2025. Abu Dhabi and Ras Al Khaimah, bolstered by fiscal surpluses, will focus on issuances based on opportunities. The UAE's domestic debt market, though still nascent, is gaining traction. Since 2021, the federal government has issued Dh27 billion ($7.3 billion) in treasury bonds and sukuk in local currency, accounting for 42 per cent of total issuances. Sharjah has also been active, issuing Dh1 billion in long-term sukuk in July 2024 and reissuing Dh7 billion in short-term sukuk in May 2024. However, most emirate and federal debt remains U.S. dollar-denominated and held externally, exposing issuers to global market volatility. Sharjah's net government debt stood at 50 per cent of GDP and an interest burden consuming 30 per cent of revenues — one of the highest among S&P-rated sovereigns. Despite this, its recent sukuk issuances were well-received, signalling market confidence. The UAE's well-capitalised banking sector, with rising deposits and healthy loan-to-deposit ratios, provides a safety net. A 2025 report from Moody's Analytics notes that UAE banks' liquidity ratios improved by eight per cent in 2024, positioning them to support lending growth. In extreme scenarios, S&P expects Abu Dhabi-backed federal support for struggling emirates. Lower oil prices have not deterred fiscal prudence. Abu Dhabi may repay part of its Dh22 billion ($6 billion) debt maturing in 2025, while Dubai continues deleveraging, repaying Dh4.4 billion ($1.2 billion) in Q1 2025. However, Dubai could ramp up borrowing from 2026 to fund major projects like the Al Maktoum International Airport expansion and rainwater drainage upgrades, according to a Bloomberg report. Ras Al Khaimah, meanwhile, issued a Dh3.7 billion ($1 billion) 10-year sukuk in March 2025 to refinance maturing debt, with tourism projects largely funded by government-related entities to limit fiscal strain. Regular local currency issuances by Abu Dhabi and the federal government are pivotal for establishing a domestic yield curve, which could streamline pricing for bank and corporate issuances and enable smaller issuers to tap capital markets. A 2025 Fitch Ratings report highlights that domestic bond issuances could reduce borrowing costs for UAE corporates by 10–15 per cent over the next five years. However, S&P anticipates that international markets and bank funding will remain dominant for corporates in the near term. The UAE's push to develop its domestic debt market reflects a broader vision of economic diversification and financial stability. By fostering local currency issuances, the emirates are not only shielding themselves from global market volatility but also paving the way for a more inclusive and dynamic capital market ecosystem.
Zawya
13-05-2025
- Business
- Zawya
VIDEO: S&P expects 7 emirates, UAE govt to issue $18bln local currency debt in 2025
This is down from $19 billion in 2024, according to Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia, S&P. Watch the Zawya video here:
Zawya
13-05-2025
- Business
- Zawya
S&P expects 7 emirates, UAE govt to issue $18bln local currency debt in 2025
The seven individual emirates and the UAE federal government are expected to issue about $18 billion (AED 66.11 billion) of local currency debt in 2025, down from $19 billion in 2024, according to Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia, S&P. Abu Dhabi and the UAE federal government are forecast to issue more than $8 billion of local currency debt this year to help develop a domestic yield curve, she added. About 55% of the debt will be used for refinancing or to roll over maturing debt, Gupta said. Among the three emirates rated by S&P - Abu Dhabi, Ras Al Khaimah and Sharjah - only Sharjah is expected to issue debt to cover a budget deficit estimated at 6.3% of GDP in 2025. The others are likely to maintain budget surpluses. However, the country's domestic debt capital market is still developing, particularly the local currency issuance segment. Since the federal government began raising debt in 2021, it has issued AED 27 billion of treasury bonds and sukuk in local currency, equating to about 42% of total issuances. Gupta said that more regular domestic currency issuances by Abu Dhabi and the UAE federal government will help to build a domestic yield curve. This will help pricing by banks and corporates, help smaller issuers access the capital markets and diversify the funding base. 'That said, we expect bank funding, along with access to international capital markets, to remain the core funding sources for corporates in the near term,' Gupta noted.
Arabian Business
17-03-2025
- Business
- Arabian Business
S&P raises Saudi Arabia's rating to A+ on economic overhaul
Global ratings agency S&P raised Saudi Arabia's long-term sovereign credit rating a notch up to 'A+' from 'A' based on the ongoing social and economic transformation in line with the Vision 2030 programme. The upgrade is underpinned by improving governance effectiveness and institutional settings, including deepening domestic capital markets, the rating agency said. S&P upgrades Saudi credit rating 'We believe that institutional checks and balances have become more visible as Vision 2030 progresses, as reflected by the recalibration of project priorities and timelines,' said Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia, S&P. The rating agency kept the outlook stable, thanks to strong non-oil growth momentum and developing domestic capital markets. S&P, however, said it expected that the current sensitivity to oil prices will weaken fiscal and external imbalances through 2028. 'We assume that oil prices will fall to $70 per barrel over 2025-2028, from $81 per barrel in 2023,' Gupta said. The announcement of a decline in Saudi Aramco dividends by one-third in 2025 will further dampen oil revenue. 'We expect the fiscal deficit will widen to 4.8 per cent of GDP this year, from 2.8 per cent in 2024,' she said. Meanwhile, strong non-oil growth and rising oil volumes from 2025 will support medium-term growth prospects. 'We project strong real GDP growth averaging 4 per cent over 2025-2028,' Gupta said. As OPEC Plus production quotas ease from April, S&P forecasts Saudi oil production to increase to above 10 million barrels per day (bpd) by 2028. This level is still far below the full capacity of about 12 million bpd. Although Saudi Aramco has suspended plans to increase its maximum sustainable capacity, it will continue investing in the four oil fields in Dammam, Berri, Marjan, and Zuluf and developing shale capacity via the Jafurah unconventional gas field. The oil sector is also directly and indirectly funding Vision 2030, through exceptional performance-linked dividends and listings. A secondary listing of Aramco in June 2024 helped to raise $12.4 billion for a 0.7 per cent stake and followed earlier large stake transfers to the Public Investment Fund (PIF) and its subsidiaries.
Zawya
17-03-2025
- Business
- Zawya
S&P raises Saudi Arabia's rating to A+ on economic overhaul
Global ratings agency S&P has raised Saudi Arabia's long-term sovereign credit rating to 'A+' from 'A' due to the ongoing social and economic transformation in line with the Vision 2030 programme. The upgrade is underpinned by improving governance effectiveness and institutional settings, including deepening domestic capital markets. 'We believe that institutional checks and balances have become more visible as Vision 2030 progresses, as reflected by the recalibration of project priorities and timelines,' said Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia, S&P. The rating agency kept the outlook stable, thanks to strong non-oil growth momentum and developing domestic capital markets. However, S&P expects that the current sensitivity to oil prices will weaken fiscal and external imbalances through 2028. 'We assume that oil prices will fall to $70 per barrel over 2025-2028, from $81 per barrel in 2023,' Gupta said. The announcement of a decline in Saudi Aramco dividends by one third in 2025 will further dampen oil revenue. 'We expect the fiscal deficit will widen to 4.8% of GDP this year, from 2.8% in 2024,' she said. Meanwhile, strong non-oil growth and rising oil volumes from 2025 will support medium-term growth prospects. 'We project strong real GDP growth averaging 4% over 2025-2028,' Gupta said. As OPEC+ production quotas ease from April, S&P forecasts Saudi oil production to increase to above 10 million barrels per day (bpd) by 2028. This level is still far below the full capacity of about 12 million bpd. Although Saudi Aramco has suspended plans to increase its maximum sustainable capacity, it will continue investing in the four oil fields in Dammam, Berri, Marjan, and Zuluf and developing shale capacity via the Jafurah unconventional gas field. The oil sector is also directly and indirectly funding Vision 2030, through exceptional performance-linked dividends and listings. A secondary listing of Aramco in June 2024 helped to raise $12.4 billion for a 0.7% stake and followed earlier large stake transfers to the Public Investment Fund (PIF) and its subsidiaries. Gupta said that Saudi authorities will continue to develop the stock exchange as a strategic platform to attract long-term capital to the country's key growth industries. 'We expect significant growth in the capital markets to be driven by improving market liquidity and regulatory initiatives, such as the new investment law and pension fund reforms,' she added. Inflation will remain contained partly due to price caps and the peg to the US dollar. Despite rising housing prices and some supply pressures, inflation will stay modest at about 1.9% over the next four years, relative to 1.7% in 2024, Gupta stated. (Editing by Seban Scaria
