UAE, GCC states move to sell stakes in govt enitities to further develop debt, equity markets

UAE, GCC states move to sell stakes in govt enitities to further develop debt, equity markets

The UAE and other Gulf states are accelerating the sale of minority stakes in government-related entities (GRE) which is a positive trend and help further develop the debt and equity markets, global ratings agency S&P said on Tuesday.

Timucin Engin, a primary credit analyst at S&P, said stake sale will create revenue generation opportunities for individual governments, and also increase market transparency due to disclosure requirements for issuing entities.

He expects these GRE sales to be broadly credited neutral for sovereign creditworthiness in the GCC.

“We do not expect revenue generated by the share sales to materially improve the public finances of the respective governments. We view the GRE sector as generating only limited contingent liabilities for their respective governments in most of the region. 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,” Engin said in a note released on Tuesday.

Highlighting the advantages of bringing in new private investors, he said the new shareholders bring expertise and new technologies, along with their equity injections, hence the respective economies could benefit from increased