April 13, 2024

RIYADH: A number of outstanding Saudi firms acquired affirmation on their credit score rankings from Moody’s Investor Providers, a number one international supplier of monetary assessments, analysis, and threat evaluation.

Following the company’s latest replace to its Authorities-Associated Issuers Methodology, a number of companies, together with Saudi Fundamental Industries Corp., Saudi Telecom Co., and Saudi Electrical energy Co., have maintained their A1 rankings, whereas Saudi Arabian Mining Co., also referred to as Ma’aden, continues to carry a Baa1 score.  

For SABIC, the A1 score acknowledges its sturdy international presence within the petrochemicals market, aggressive value construction, and strong monetary well being.  

Moody’s additionally highlights the cyclical nature of SABIC’s operations and its focus in Saudi Arabia as concerns. 

stc’s A1 score displays its dominant place within the Saudi telecommunications sector, sturdy monetary metrics, and substantial authorities assist. Challenges embody market competitors and the capital depth of the telecom business, Moody’s acknowledged. 

SEC’s score considers its built-in electrical energy operations, market dominance, and regulatory assist balanced towards the corporate’s rising debt burden resulting from important infrastructure investments. 

Ma’aden’s Baa1 score is supported by its diversified manufacturing, low-cost operations, and strategic significance to Saudi Arabia’s economic system. 

The corporate’s publicity to commodity worth volatility and its enlargement plans are areas of focus. 

The optimistic outlooks for SABIC, stc, and SEC align with Moody’s view on the federal government of Saudi Arabia, indicating a excessive chance of state assist.  

Moreover, Ma’aden’s secure outlook displays its strong monetary insurance policies and liquidity administration. 

The rankings of the Saudi firms may probably be upgraded or downgraded based mostly on a number of components outlined by Moody’s.  

For SABIC, an improve might be on the horizon if the rankings of the Saudi authorities or Saudi Aramco are elevated or if the corporate itself demonstrates improved income and profitability and maintains sturdy credit score metrics and liquidity.  

Conversely, SABIC’s rankings would possibly face a downgrade if the corporate experiences a major downturn in working efficiency or engages in heavy debt-financed investments, pushing its deficit to earnings earlier than curiosity, taxes, depreciation, and amortization ratio towards a a number of of 1.5. 

Equally, stc may see its scores positively impacted if the rankings of the federal government or the Public Funding Fund are upgraded, given its standing as one of many highest-rated telecom operators globally.  

Nevertheless, an escalation in competitors, debt-financed acquisitions, or sustained destructive free money movement may apply downward stress on stc’s rankings. Any lower within the authorities’s or PIF’s rankings would additionally probably lead to a downgrade for stc. 

SEC’s state of affairs mirrors that of the aforementioned entities, with the potential for an improve if the sovereign score of Saudi Arabia or the PIF improves, contingent upon the corporate sustaining sturdy operational and monetary efficiency.  

A downgrade may happen if there’s a notable decline within the firm’s liquidity profile or its monetary metrics weaken considerably. 

Ma’aden’s rankings might be elevated if the corporate efficiently reduces its debt relative to EBITDA and boosts its retained money movement to web debt ratio whereas sustaining sturdy liquidity. 

Conversely, a rise in debt and EBITDA ratio past sure thresholds or a major weakening of liquidity may set off a downgrade.  

Changes within the perceived chance of assist from PIF or the federal government in occasions of monetary stress may additionally affect Ma’aden’s rankings.