S&P said projects including the $3.9 billion Wynn Al Marjan Island could strengthen the emirate’s’ growth prospects and income levels over the next three years
Ras Al Khaimah has had its outlook revised to positive on growth potential by S&P due to projects including the $3.9 billion Wynn Al Marjan Island.
The ratings agency said the resort was one of the tourism and other infrastructure projects which could strengthen the northern emirate’s growth prospects and income levels over the next two-to-three years.
It said that RAK’s fiscal surpluses will support a government net asset position of around 13% of GDP by 2026 and had therefore revised its outlook on a long-term rating on RAK to positive from stable and affirmed its A-/A-2 sovereign credit ratings on RAK.
“The positive outlook reflects our view that RAK’s economy could grow beyond our current expectations on the back of planned construction projects in the emirate and the spillover effects on RAK’s mining sector from investment spending in the United Arab Emirates (UAE), the rest of the Gulf Cooperation Council (GCC), and the Indian sub-continent.”
S&P said its upside scenario is that it would raise ratings over the next two years if RAK’s economic prospects strengthen, underpinning higher GDP per capital income levels, while its fiscal performance remains strong.
However, the downside scenario is that it could revise the outlook back to stable if the government’s fiscal position materially deteriorates, for example if the emirate incurred significant debt to fund capital projects.
“We currently expect these to be predominantly financed via existing budgetary headroom and land sales. We could also lower the ratings if debt-service costs significantly increase.”
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