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Fitch sees GCC non-oil firms doing well in 2024: Fitch ratings sees the Emirates and Saudi Arabia “leading the investment pipeline in 2024,” amid what it says is a “neutral” outlook for GCC businesses for the year in its 2024 GCC Corporates Outlook report. Corporates operating in the region are expected to record a solid year and post stable earnings, driven by public-sector spending in infrastructure and energy, high oil prices and potential Fed interest rate cuts, according to Fitch Ratings.
GCC corporates are expected to improve their fiscal budgets on the back of high oil prices, with Fitch expecting Brent crude oil to settle around USD 80 in 2024. This outlook matches the US Energy Information Administration’s (EIA), which sees Brent crude oil prices averaging USD 83 per barrel in 2024.
A “delay” in mega-project investments could impact non-oil firms: On the downside, new government financial policies could impact non-oil companies’ order backlog and cashflow visibility as investments in mega-projects see delays, the ratings agency said.
Non-oil GDP to inch down: The ratings agency expects the momentum for the non-oil sector in the GCC to slow, growing at a 3.7% clip in FY 2024, compared to the 4.2% projection for FY 2023.
ICYMI- UAE and KSA non-oil sectors continued to grow in 2023: Activity in the UAE’s non-oil private sector expanded to its highest level in over four years in December, surging to 57.4, recording the second-best expansion level since mid-2019, according to S&P Global’s purchasing managers’ index (PMI). KSA’s non-oil sector also recorded a four-month high growth level in 2023 in October, accelerating to 58.4.
GCC firms will borrow more: Citing GCC borrowers adapting to the high-interest rate environment and increasing their fixed-income issuances by 3.5x in 2023, the ratings agency sees “debt capital markets activity for corporate sectors [rising], depending on the respective volatility and accessibility of the financial markets.” The Emirates’ debt capital market is expected to reach USD 300 bn (AED 1.1 tn) by 2030, the ratings agency said in September last year.
But they’re in the clear from refinancing risk, with the majority of Fitch-rated GCC corporate issuers having stable or positive outlooks. Emirati and Saudi corporate issuers are due to pay off USD 30 bn (AED 110 bn) for outstanding bonds and sukuk, with maturities set for 2024-2026.
