Moody’s might cut Abu Dhabi

Moody's Investors Service said it placed Abu Dhabi's Aa2 government bond and issuer ratings on review for downgrade.

The senior unsecured medium-term note program rating at provisional Aa2 was also placed on review for downgrade.

Moody's said the review will assess the extent of the impact of the further sharp fall in oil prices, which it expects to remain low for several years, on the Abu Dhabi's economic performance and the balance sheet of its government in the coming years.

In particular, the review will allow the agency to determine the extent to which Abu Dhabi's economic and fiscal strength and quite large financial buffers insulate it from the need to take a rating action to reflect the impact of the price shock.

Abu Dhabi is highly dependent on hydrocarbons to drive economic growth and to finance government expenditure. In 2014, oil and gas accounted for over 87.5% of goods exports and roughly 32.5% of GDP. It also provided around 74.0% of consolidated government revenues.

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