Moody's Investors Service has raised Saudi Arabia's credit rating by a notch citing "strong" government finances that have withstood volatile oil prices and the global recession.
The Kingdom's foreign and local currency government debt ratings were raised one notch to Aa3, the fourth-highest grade, from A1 with a stable outlook, Moody's said in a statement in Singapore yesterday.
It also increased the country's ceiling for foreign-currency bank deposits to the same level.
"The upgrade was prompted by the continued strong state of government finances, which have largely withstood oil price volatility and the global economic crisis," Moody"s said.
Saudi Arabia is now a rank below Abu Dhabi, Kuwait, Qatar and the UAE, all rated at Aa2.
For the rating to move higher, "Moody's will assess prospects for continued strength in public sector finances and the success of the government's infrastructure programme in improving the country's long-term competitiveness and economic strength," Moody's senior Vice-President in Singapore Thomas Byrne said in the statement.
Saudi Arabia's rating upgrade comes as investors increase scrutiny on government finances of some European nations on concerns that widening budget deficits will make it difficult for them to repay debt.
"The kingdom's banking system is one of the few globally to have maintained a stable outlook during the crisis," Moody's said.