Fitch Ratings says in its first regular "MENA Sovereign Credit Outlook" that the gap between average sovereign ratings of energy importers and exporters in the Middle East and North Africa (MENA) is at its widest level since we began assigning sovereign ratings in the region in 1997 and could widen.
Energy exporters' credit profiles have benefited from rising oil prices and production that have increased oil export revenues for Gulf Cooperation Council (GCC) members from an average of $ 375 billion between 2004 and 2010 to nearly $ 700 billion last year. This has helped them strengthen their sovereign balance sheets, build fiscal buffers and improve their external financing positions at the same time as significantly enhancing physical infrastructure.
Meanwhile the credit profiles of many of the MENA region's energy importers have suffered from weaker economic growth and have also been affected by political upheavals from which GCC exporters have been more insulated (although Bahrain and Kuwait have both experienced political tensions, while Morocco has achieved a relatively smooth political transition).
Oil prices will remain resilient (we forecast Brent crude to average $ 105 a barrel in 2013 thanks to rising emerging market demand and little supply growth outside of North America and Iraq, meaning 2013 should be another year of bumper oil revenues for GCC oil exporters, whose economic and fiscal prospects remain far better than those of importers.
While currently an energy importer, Israel's commencement of offshore gas production in 2013 will displace expensive foreign imports, and the country will be in position to begin gas exports in the second half of the decade. Gas production should be positive for Israel's rating over time.
Excluding Israel, MENA energy importer sovereign ratings range from "BBB-" (Morocco) to "B" (Egypt and Lebanon, and the Outlooks on Egypt and Tunisia (rated "BB+') are Negative. Energy exporters' ratings range from "BBB" in Bahrain to "AA" in Kuwait and Abu Dhabi. The Outlook on Saudi Arabia's "AA-" rating is Positive.