GCC Corporate And Infrastructure Outlook 2024: Holding Up Against Refinancing Needs

Resilience Amidst Global Economic Challenges

In 2024, the majority of corporate and infrastructure ratings within the Gulf Cooperation Council (GCC) are expected to withstand the challenges posed by subdued global economic growth and elevated interest rates. This resilience is anticipated due to forecasted increases in both EBITDA and capital expenditures (capex), which are a reflection of the ambitious economic development agendas pursued by rated entities. Consequently, their financial metrics are likely to either remain stable or experience slight improvements.

Manageable Refinancing Risk

The refinancing risk for our rated portfolio is deemed largely manageable, with 75%-80% of the debt due in 2024 being held by highly rated government-related entities (GREs). This suggests a strong backing and financial stability for these entities, reducing concerns over their ability to meet debt obligations.

Acceleration in Decarbonization Initiatives

In the realm of infrastructure, a surge in the execution of decarbonization projects is expected, especially in the aftermath of COP28. This is in line with a gradual shift back to capital markets for debt refinancing purposes by issuers. Such initiatives are crucial for the region's transition towards more sustainable energy sources and practices.

Geopolitical Risks and Investor Confidence

However, the region's high geopolitical risk remains a significant concern, as it could impact investor confidence. This is particularly relevant for companies whose operations and investment attractiveness are closely tied to the geopolitical stability of the region.