Fitch affirms Kuwait at AA

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Fitch Ratings has affirmed Kuwait’s long-term foreign and local currency issuer default ratings (IDR) at AA. The outlooks are stable. The country ceiling has been affirmed at AA+ and the short-term foreign currency IDR at F1+.

Fitch said Kuwait’s key credit strengths are its exceptionally strong fiscal and external metrics and, at around $48 a barrel, one of the lowest fiscal break-even Brent oil prices among Fitch-rated oil exporters. Forecast fiscal and external surpluses will continue to add to Kuwait’s existing buffers, if at a lower rate than historically. These strengths are tempered by Kuwait’s heavily oil-dependent economy, a degree of geopolitical risk, and weak scores on measures of governance and ease of doing business.

“Kuwait has ample assets to cover medium-term spending needs,” Fitch said. “We expect total assets managed by the Kuwait Investment Authority (KIA) to reach $472bn (377 per cent of GDP) in 2015/16 and continue to rise beyond that due to investment returns and on-going transfers of revenue. Based on unofficial, publicly available sources, we estimate KIA assets were $456bn (298 per cent of GDP) at the end of the year ending June 2014, up from $424bn at the end of the previous year.”