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Jeddah - Yasmine El Tohamy - RIYADH: Fitch Ratings has revised Saudi Aramco’s long-term foreign-currency issuer default rating to “positive” as it affirmed its “A” rating.
The change, up from “stable”, follows a similar rating action on its parent nation, Saudi Arabia.
“Saudi Aramco’s rating is constrained at that of its majority shareholder Saudi Arabia, given the close links between the company and the sovereign,” wrote Fitch in its report.
The credit agency revealed that Saudi Aramco’s financial profile benefits from strong pre-dividend free cash flow generation and conservative leverage, along with large scale production, vast reserves, low output costs and expansion into downstream and petrochemicals.
Fitch had raised its outlook on Saudi Arabia to “positive” from “stable” earlier this month on the back of improvements in the country’s sovereign balance sheet due to increased oil prices.
“The company’s robust financial position has not necessitated support from the government historically, but we expect that support would be forthcoming if the need arises,” said the ratings agency, adding: “We view socio-political or financial implications of the company’s default as ‘very strong’ due to Saudi Aramco’s key role in the economy of Saudi Arabia.”
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