GCC asset sales will increase transparency, revenues: S&P

GCC asset sales will increase transparency, revenues: S&P

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Asset sales by government related entities (GRE) in the GCC will increase transparency, broaden funding sources and support capital market development, according to S&P.

The move is credit neutral as long as their strong underlying financial positions do not change significantly and the government remains the majority controlling shareholder, the rating agency said.

S&P said GCC governments, particularly Saudi Arabia and the UAE, are accelerating the sale of minority stakes in GREs, which is a positive trend that is further developing the debt and equity markets of the countries.

It will also create revenue generation opportunities for the individual governments and increasing market transparency, the agency said in a RatingsDirect update, and is evidence of the strong underlying financial position of the GREs.

“We believe that, with the exception of Oman, GCC governments have sufficiently strong balance sheets, in relation to the level of outstanding GRE debt, to absorb financial distress in the GRE sector, without materially worsening their overall fiscal positions,” the agency said, adding: “Nevertheless, we note that bringing in private investors should share the burden of any costs related to financial distress at the GREs beyond the government.

“More generally, if the new shareholders bring expertise and new technologies, along with their