Qatar gets off credit agency's negative watchlist amid easing energy risks

One of the main credit-rating agencies, Fitch Ratings, has removed Qatar from its negative watch list after placing the country there in March amid concerns over the impact of the regional conflict on energy infrastructure and Qatar’s ability to maintain LNG exports.

The British-American credit-rating firm announced its decision on September 5, meaning it no longer considers an immediate downgrade for Qatar from its current rating.

When one of the world’s three major credit-rating agencies — S&P, Moody’s, or Fitch — places a country or entity on negative watch, it indicates that the agency has identified circumstances that could lead it to downgrade the entity’s credit rating in the near future.

In addition to a credit rating, the agencies attach an outlook to a company or sovereign entity, reflecting the agency’s assessment of its ability to repay debt. The outlook may be stable, under review, negative watch, or negative.

Having its credit rating downgraded, or being placed under negative watch, means an entity may have to pay higher interest rates to borrow money from banks or issue bonds on the market. Stock investors may also interpret such a move as a warning sign, potentially reducing the attractiveness of the country or company to foreign direct investment.

"The removal from RWN reflects that while the geographic concentration and high complexity of Qatar's LNG facilities is a vulnerability, the risks of further severe damage have reduced since March and the impact of the war on the credit profile will take longer to discern," Fitch argued.

The company also announced that it is maintaining its "AA" sovereign credit rating for Qatar. An “AA” rating is among Fitch’s highest grades, indicating a very strong ability to meet financial commitments and a very low expected risk of default.

Fitch highlighted Qatar’s solid sovereign assets, one of the world’s highest GDP per capita levels, and ongoing expansion of gas production as key strengths supporting the country’s credit profile despite recent regional pressures.

Qatar, one of the world’s largest gas exporters, continues to face export disruptions and shortages caused by damage to energy facilities during the war on Iran, which began six months ago.

However, those concerns have not fully disappeared. The agency continues to flag disruption to LNG shipments through the Strait of Hormuz as a source of pressure. As a result, Fitch’s rating for the Gulf state now carries a "Negative Outlook", citing ongoing risks surrounding the movement of gas exports through the restricted waterway.

By Nazrin Sadigova