Fitch removes Qatar from negative watchlist while maintaining AA rating

11:15

By: Azzat Manal

Fitch removes Qatar from negative watchlist while maintaining AA rating

Fitch Ratings has removed Qatar from its negative watchlist while maintaining the country’s sovereign credit rating at AA, citing a reduction in risks to its liquefied natural gas infrastructure since March.

The rating agency nevertheless kept Qatar’s outlook at negative, reflecting continued uncertainty surrounding the country’s LNG exports and the risks posed by disruptions through the Strait of Hormuz.

Qatar is one of the world’s leading liquefied natural gas exporters and relies heavily on the energy sector as a major source of government revenue and economic activity. Recent disruptions to LNG shipments, combined with damage affecting energy facilities, have increased pressure on the country’s economic outlook.

The economic impact of the conflict has also led to a significant deterioration in growth expectations. Qatar is now expected to record an 8.1% contraction in gross domestic product this year, compared with a 6% decline forecast in April, according to a Reuters survey.

Fitch said the effects of the conflict on Qatar’s creditworthiness would take longer to be fully absorbed. The agency’s decision to remove the country from negative watch therefore does not eliminate the risks weighing on its sovereign outlook.

The rating confirmation follows several months of concerns over the possibility of a downgrade as regional security tensions intensified. Qatar’s strategic position and dependence on LNG exports make disruptions to energy infrastructure and shipping routes particularly significant for its economy.

Reuters reported last month that Qatar had lost approximately $24 billion in gas sales since the conflict began six months earlier, underlining the financial consequences of the disruption to exports.

Other major rating agencies have also maintained their assessments of Qatar. S&P Global Ratings and Moody’s previously reaffirmed the country’s credit standing, pointing to its strong fiscal position and substantial financial buffers as factors that could help cushion the impact of regional conflict.

The latest Fitch decision provides some relief for Qatar’s sovereign credit profile, but the negative outlook indicates that significant risks remain. The future performance of the energy sector, the stability of regional trade routes and the broader economic consequences of the conflict will remain key factors for the country’s creditworthiness.