RIYADH: Chemical companies in the Gulf Cooperation Council, particularly Saudi Arabia, are outperforming their European rivals due to low prices for feedstock, long-term security of supply, and solid customer and shareholder bases, S&P Global said in a report.
It said the Kingdom dominates the GCC chemicals output, with companies based in Saudi Arabia accounting for 75 percent to 80 percent of the region’s total chemical sales by value.
GCC chemical companies, it added, are likely to be more resilient to higher interest rates and energy costs than their European peers.
“We believe that the GCC chemical companies that we rate can absorb the combination of rising feedstock prices and borrowing costs without downgrades at this stage,” said an S&P Global Ratings analyst.
“However, the conditions also make upgrades less likely,” Rawan Oueidat added.
In April, Fitch Ratings revised Saudi Basic Industries Corp.’s long-term foreign-currency issuer default rating, IDR, to positive from stable and affirmed its A rating, following similar rating action on its majority parent Saudi Aramco.
“SABIC’s rating is aligned with that of its parent Saudi Aramco, reflecting the strength of the ties between the two companies in accordance with Fitch’s Parent and Subsidiary Linkage Rating Criteria,” Fitch said.
The credit agency revealed that SABIC’s rating reflects the company’s cost leadership and conservative financial profile.
Ratings agency Fitch on April 26 revised its outlook for state-owned Saudi Arabian Oil Co. to “positive” from “stable.”
The agency had raised its outlook on Saudi Arabia to “positive” from “stable” earlier in April on the back of improvements in the country’s sovereign balance sheet thanks to higher oil revenues.
The only other Fitch A-rated chemical company is German multinational BASF SE.
