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Saudi Aramco’s robust financial standing has been reaffirmed by Moody’s and Fitch, with the agencies assigning strong ratings to the energy giant’s newly established $10 billion US Commercial Paper Program.

Moody’s assigned a Prime-1 short-term issuer rating to the energy giant and reaffirmed its Aa3 long-term issuer rating with a stable outlook, reflecting the company’s ability to meet financial obligations. 

Meanwhile, Fitch Ratings awarded an F1+ short-term rating, highlighting Aramco’s strong intrinsic capacity for timely payments and financial resilience. 

Aramco has established a $10 billion US Commercial Paper Program to issue notes with maturities of up to 270 days. 

Commercial paper is an unsecured, short-term debt instrument issued by corporations, typically used to cover receivables or meet short-term financial obligations, such as funding new projects. 

“Aramco has excellent liquidity. Its consolidated cash balance and operational cash flow are more than sufficient to meet the group’s debt maturities, investment commitments and dividends over the next 12 to 18 months,” said Moody’s. 

As of Sept. 30, the company had $69 billion of cash and cash equivalents. 

The credit rating agency also projected that Aramco is expected to generate $180 billion in funds from operations through March 2026, sufficient to cover $16 billion in debt maturities, $85 billion in capital spending, and $140 billion in dividends over the same period. 

The report also noted that the energy company maintains undrawn $10 billion multi-tranche revolving credit facilities, set to expire in April 2029. 

Fitch echoed similar confidence, noting that Aramco’s financial profile is bolstered by its conservative financial policies, low production costs, and strong pre-dividend free cash flow. 

“Its business profile is characterized by large-scale production, vast reserves, low production costs and expansion into downstream and petrochemicals,” said Fitch Ratings. 

It added: “We expect state support to be forthcoming, although historically the company’s robust financial position has not necessitated government support. ��������Ƶ has provided support to other government-related entities in the past.” 

Assigning an Aa3 baseline credit assessment rating to Aramco, Moody’s stated that the positive rating reflects the company’s proven track record in executing large-scale projects, significant downstream integration, conservative financial policy, and strong financial flexibility, supported by its low production costs. 

“These characteristics provide resilience through oil price cycles and also help balance carbon transition risk, which is a material credit consideration for oil and gas companies,” added Moody’s. 

Both agencies emphasized the strong link between Aramco’s ratings and those of the Saudi government. 

Moody’s highlighted that Aramco’s Aa3 rating reflects the Kingdom’s solid credit standing, recently upgraded to Aa3 by Moody’s in November. The agency added that any changes in the sovereign rating would directly impact Aramco’s ratings. 

Moody’s gives Aa3 ratings to countries which have a very low credit risk and hold the best ability to repay short-term debt. 

“An upgrade of the sovereign rating would likely lead to an upgrade of Aramco’s rating if it maintains prudent financial policies and robust credit metrics. Negative pressure on the sovereign rating will lead to negative pressure on Aramco’s rating,” said Moody’s in the latest report. 

Similarly, Fitch noted that ��������Ƶ’s A+ sovereign rating, affirmed in February, underscores the Kingdom’s strong capacity for financial commitments and its ability to provide support to Aramco if needed. 

Both agencies acknowledged Aramco’s capacity to adapt to market conditions, particularly its ability to adjust dividend commitments in response to oil price fluctuations. In 2024, Aramco delivered a base dividend of $81.2 billion, supported by its strong operating cash flow. 

RIYADH: Trading activity across Arab financial markets surged in November, with volumes jumping nearly 60 percent, driven by strong performance in Iraq and other regional exchanges, a new report showed.  

In its latest monthly analysis, the Arab Monetary Fund reported that the Iraq Stock Exchange led the way with a 131.24 percent surge in trading volumes, followed by the Beirut Stock Exchange, which recorded an 87.83 percent increase. 

Other standout performers included the Damascus Securities Exchange with a 71.80 percent gain, Bahrain Bourse with 68.22 percent, and Dubai Financial Market with 54.26 percent. 

The surge in trading volumes across Arab financial markets comes against the backdrop of a region grappling with a complex mix of economic recovery efforts, geopolitical challenges, and fluctuating investor sentiment.

While some countries are benefiting from stabilizing oil prices and diversification efforts, others face hurdles such as political instability, currency pressures, and regional tensions 

Modest gains were seen in Egypt and Casablanca, which posted increases of 19.08 percent and 0.58 percent, respectively. However, some markets faced declines, with the most significant drop recorded by the Abu Dhabi Securities Exchange, where trading volumes fell by 61.67 percent.    

The market capitalization of Arab financial markets included in the Arab Monetary Fund’s composite index showed a slight improvement, rising 0.13 percent, or $5.54 billion, by the end of November compared to October.    

Nine exchanges reported gains, led by the Damascus Securities Exchange, which saw an increase of 16.17 percent in market capitalization, followed by the Dubai Financial Market at 5.17 percent.    

Other markets, including Casablanca, Iraq, Amman, and Kuwait, posted increases ranging from 3.71 percent to 1.23 percent.    

Conversely, declines were recorded in Beirut, Tunisia, Muscat, and ��������Ƶ, each reporting drops of less than 1 percent. Larger declines were observed in Palestine and Qatar, where market capitalization fell by 1.05 percent and 1.29 percent, respectively.  

“In terms of contribution to the overall monthly change in trading value, the Dubai Financial Market had the largest positive contribution at 2.18 percentage points,” the report noted.   

Meanwhile, the Saudi Stock Exchange made the most significant negative impact, contributing a decline of 0.31 percentage points.    

In contrast to the growth in trading volumes and marginal improvement in market capitalization, trading values across Arab financial markets plummeted by 25.11 percent in November compared to October.    

Six exchanges recorded increases in trading value, while nine posted declines. The Bahrain Bourse led the gains, with a 154.94 percent rise in trading value, followed by Beirut and Damascus, which grew by 87.97 percent and 58.81 percent, respectively.    

Dubai Financial Market also saw a 49.47 percent increase, contributing the highest positive impact of 2.18 percentage points to the monthly trading value change.   

On the downside, the Egyptian Exchange experienced the steepest decline in trading value, dropping 32.93 percent, while the Tunis Stock Exchange followed with a sharp 71.57 percent decrease.    

Other markets, including Kuwait, ��������Ƶ, Palestine, and Iraq, recorded declines ranging from 6.64 percent to 18.66 percent.    

The Egyptian Exchange contributed the largest negative impact to the overall change in trading value, accounting for an 8.25 percentage-point drop.