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Moody’s upgrades Saudi rating

Upgrade “prompted by the continued strong state of government finances,” said ratings agency.

February 15, 2010 7:34 by

Rating agency Moody’s Investors Service upgraded Saudi Arabia’s foreign and local currency government ratings to Aa3 from A1, it said on Monday. “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 in a release.

“A return in the budget to a moderate surplus – from an estimated small deficit in 2009 – will restore the Kingdom’s debt trajectory back on its former improving trend, even with continued large-scale infrastructure spending,” it said.

The Kingdom’s strong banking system also had an effect on its ratings, Moody’s said. “[Saudi’s banking system] has demonstrated the ability to absorb and contain shocks emanating from the global financial crisis, Dubai and domestic corporate debt problems,” the firm said.

The Saudi Arabian Monetary Agency had total reserve assets of $410 billion at the end of 2009, which probably even exceeded the Kingdom’s GDP last year, added Moody’s.

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