Rating agencies take closer look at Saudi banks | Jareer Elass

Rating agencies take closer look at Saudi banks | Jareer Elass

The recent collapse in crude prices driven by a sharp coronavirus-led drop in global oil demand has prompted major credit rating agencies to take a closer look at Saudi Arabia's banks.. Given that Saudi Arabia is the GCC's largest economy, credit rating agencies are reassessing the kingdom's bank ratings as Riyadh begins making budget cuts and upping domestic and foreign borrowing to meet what is likely to be an even higher than anticipated budget deficit this year.. The agency subsequently downgradedthe support ratings of a number of Saudi banks, saying: "The actions reflect the agency's views that Saudi banks' support ratings and support rating floors are sensitive to changes in Saudi Arabia's sovereign rating.". The Saudi government had initially forecast the state budget deficit to widen to around $50 billion in 2020, or 6.5% of GDP, but on March 20 Saudi Finance Minister Mohammed al-Jadaan said: "I don't expect the deficit by the end of 2020 to exceed 7% to 9%, and this is our target.".