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RIYADH: Several prominent Saudi companies have received affirmative credit ratings from Moody’s Investors Service, a leading global provider of financial valuations, research and risk analysis.
Following the agency’s recent update to its government-related issuer methodology, several companies maintain their A1 ratings, including Saudi Basic Industries Corporation, Saudi Press Agency, and Saudi Electricity Company, while Saudi Mining Corporation, also known as Saudi Mining The company maintains an A1 rating. Ma’aden continues to hold a Baa1 rating.
SABIC’s A1 rating recognizes its strong global presence in the petrochemical market, competitive cost structure, and strong financial health.
Moody’s also highlighted the cyclical nature of SABIC’s operations and its concentration in Saudi Arabia as considerations.
stc’s A1 rating reflects the company’s dominant position in the Saudi telecommunications sector, strong financial metrics, and substantial government support. Challenges include market competition and capital concentration in the telecommunications industry, Moody’s said.
The SEC’s rating considers the company’s overall power business, market power, and regulatory support balanced by the company’s growing debt burden from significant infrastructure investments.
Marden’s Baa1 rating is supported by its diversified production, low-cost operations, and strategic importance to the Saudi economy.
The company’s exposure to commodity price fluctuations and expansion plans are areas of focus.
The positive outlook for SABIC, stc and SEC is consistent with Moody’s view of the Saudi government and indicates a high likelihood of state support.
Additionally, Marden’s stable outlook reflects its prudent financial policies and liquidity management.
Saudi Arabian companies’ ratings may be upgraded or downgraded based on a number of factors outlined by Moody’s.
In the case of SABIC, an upgrade could be on the horizon if the Saudi government or Saudi Aramco’s ratings increase, or if the company itself shows improved revenue and profitability and maintains strong credit metrics and liquidity. There is.
Conversely, if the company experiences a significant deterioration in business performance or makes large debt investments, and the ratio of deficit to earnings before interest, taxes, depreciation, and amortization approaches 1.5 times, SABIC’s rating may be downgraded.
Similarly, given STC’s status as one of the highest-rated carriers globally, an upgrade in the government or public investment fund’s rating could have a positive impact on its score.
However, increased competition, debt-financed acquisitions, or continued negative free cash flow could put downward pressure on stc’s ratings. A downgrade in the government’s or PIF’s rating would also likely lead to a downgrade of the stc.
The SEC’s situation mirrors that of the aforementioned companies, which could be upgraded if Saudi Arabia’s or PIF’s sovereign ratings improve, provided the company maintains strong operational and financial performance.
A downgrade may occur if a company’s liquidity profile deteriorates significantly or if its financial indicators deteriorate significantly.
Marden’s rating could be upgraded if the company succeeds in reducing debt relative to EBITDA and increasing the ratio of retained earnings to net debt, while maintaining strong liquidity.
Conversely, if the debt-to-EBITDA ratio increases beyond a certain threshold, or if liquidity declines significantly, this could trigger a downgrade.
Adjustments to the perceived likelihood of receiving PIF and government support in times of financial stress could also impact Marden’s ratings.
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