Moody’s assigns Aa2 rating to Qatar global bonds, stable outlook

Moody's Investors Service has assigned an Aa2 rating to the Qatari government's global bond offering consisting of three tranches: US$2 bln bond due in January 2017, US$2 bln bond due in January 2022, US$1 bln bond due in January 2042.
The rating is based on the state of Qatar's Aa2 sovereign issuer rating and supported by the government's successful management of its considerable hydrocarbon resource endowment, as reflected in strong government financial and external payments.
The rating agency added that Qatar's exceptionally high per capita income level — one of the highest in the world at $88,222 in purchasing power parity terms — has helped provide social stability and has insulated the country from the recent political turmoil seen in a number of Middle Eastern and north African countries.
Qatar's ratings are constrained by economic, institutional and political factors. Hydrocarbon production is likely to reach a plateau in 2012, and this is likely to lead to an increase over time in the country's vulnerability to potential price shocks in terms of their impact on economic growth, government finances and the balance of payments. Although the government holds large assets, the precise scale of net international investment position is not known, reflecting limitations in the coverage, quality and timeliness of official statistics.
Moreover, Qatar faces geopolitical threats, which Moody's assesses as representing a 'moderate' level of event risk as part of the rating agency's sovereign methodology.
Qatar's sovereign ratings have a stable outlook based on the country's fiscal and external current account surpluses, which are likely to remain large over the medium term. Moody's said it has “some concerns” about the country's accumulation of external debt within the public sector in recent years, much of which has been due to the development of the liquefied natural gas (LNG) industry. For 2011 as a whole, Moody's estimates that proceeds from LNG production will have comprised around 60% of Qatar's total exports and 20% of government revenues, thus benefiting the country's debt-repayment capacity.
Moody's would consider upgrading Qatar's sovereign rating in the event of an abatement in regional political tensions, economic diversification, and a sustained improvement in the quality and transparency of the country's political, administrative and legal institutions.
Downward rating pressure could develop as a result of a potential significant deterioration in Qatar's regional or domestic political environment, as well as a weakening in the overall state of the country's public finances.