S&P: GCC Asset Sales to Up Transparency & Capital Market Development

Asset sales by government-related entities will enhance transparency and support capital market development among GCC members, according to S&P Global Ratings. According to the rating agency, GCC governments, particularly Saudi Arabia and the UAE, are accelerating the sale of minority stakes in government-related entities, which can be considered a positive trend, as it will develop debt and equity markets of these countries. It will also create revenue generation opportunities for the individual governments, and increase market transparency, the agency noted in its latest report.

“We believe that, with the exception of Oman, GCC governments have sufficiently strong balance sheets, in relation to the level of outstanding GRE debt, to absorb financial distress in the government-related entities sector, without materially worsening their overall fiscal positions,” S&P said in the report. S&P Global Ratings credit analyst Trevor Cullinan said, “We see the sales as credit neutral for the GREs as long as their strong underlying financial positions do not change significantly and the government remains the majority controlling shareholder.”