Qatar's credit rating upgraded by Moody's to match France, UAE, overtake UK

By Abeer Abu Omar

Qatar’s already high credit rating was upgraded by Moody’s Investors Service for the first time since 2007, as strong global demand for liquefied natural gas boosts the Gulf state’s long-term prospects.
 

Moody’s lifted Qatar one level to Aa2, its third-highest investment grade, according to a statement late Thursday. It’s now on par with France, South Korea and the United Arab Emirates, and a level above the UK.

The rating company also changed Qatar’s outlook from positive to stable, meaning another upgrade is unlikely in the short term. Qatar’s rated the same level by S&P Global Ratings and one step below by Fitch Ratings.

“The upgrade reflects Moody’s view that the significant improvement in Qatar’s fiscal metrics, achieved during 2021-2023, will be sustained in the medium term,” Moody’s analysts including David Rogovic wrote. “The government will continue to maintain fiscal prudence, including by continuing to wind down its infrastructure spending program.”

Moody’s also cited Qatar’s “large ramp-up” in LNG production as a positive factor. The country, which vies with the US and Australia as the biggest exporter of LNG, is spending tens of billions of dollars to increase its supply capacity in the next three years by around 60 per cent.

Following Russia’s invasion of Ukraine in 2022 and Moscow cutting piped gas supplies to Europe, Qatar’s been selling more LNG to the continent.

Qatar’s economy slowed last year, in part because of the ending of projects related to the football World Cup held in late 2022. The government spent an estimated $300 billion on the event, a huge sum for the country of 3 million people.

Still, the International Monetary Fund is predicting robust growth for the next several years.

Qatar is getting ready to offer its first green bond soon, the country’s finance minister told Bloomberg News this month. The sale would constitute Qatar’s first external deal of any kind in four years, said Ali Al-Kuwari.

The Gulf monarchy has been at the forefront of regional geopolitics in recent months. It’s emerged as a crucial conduit between Israel and Hamas, which is designated a terrorist organization by the US and the European Union, over their war in Gaza.