Aramco’s long-term IDR gets Fitch ratings upgrade

Aramco’s long-term IDR gets Fitch ratings upgrade

Fitch Ratings has upgraded Saudi oil giant Aramco's long-term foreign- and local-currency issuer default ratings (IDR) to 'A+' from 'A' with stable outlook. This follows the upgrade of Saudi Arabia (A+/Stable).

Saudi Aramco is the world's largest oil producer and Saudi Arabia's national oil company. Its financial profile benefits from strong pre-dividend free cash flow (FCF) generation, conservative financial policies and a net cash position.

Its business profile is characterised by large scale production, vast reserves, low output costs and expansion into downstream and petrochemicals, said a statement from Fitch Ratings.

Its upstream operations focus on a single country and compared with global oil and gas majors, its operations are skewed towards crude oil production, it stated.

Saudi Aramco's rating is constrained at that of its majority shareholder Saudi Arabia, given the close links between the company and the sovereign.

Fitch in its review, stated that Aramco's standalone credit profile (SCP) at 'aa+'. Saudi Aramco's short-term IDR of 'F1+' is equalised with that of the sovereign.

Sovereign Constrains Rating: Saudi Aramco's rating is constrained by that of Saudi Arabia in accordance with Fitch's Government-Related Entities (GRE) Rating Criteria and Parent and Subsidiary Linkage (PSL) Rating Criteria.

This reflects the influence the state exerts on the company through