Latest news with #sovereigncredit
Yahoo
16-07-2025
- Business
- Yahoo
What is the U.S. credit rating, and how does it impact you?
Just as individuals have credit scores, countries are also graded on their ability to repay borrowed money. And recently, the U.S.'s credit rating dropped. This May, Moody's downgraded the U.S. government's Aaa rating for the first time since 1949, lowering it to the second-highest available rating of Aa1. Moody's also changed the country's credit outlook from "stable" to "negative." For anyone unfamiliar with national credit ratings, that might sound pretty bad. But to give you a sense of comparison, it's sort of like seeing your personal credit drop from a perfect 850 score to an excellent 830. A change like that wouldn't be terribly consequential for you, unless the trend continued. This embedded content is not available in your region. Similarly, the U.S. downgrade may not make big waves by itself. However, there's some speculation that the nation's new rating is still too high and will continue to drop. And that could come with negative consequences that impact your bottom line. Here's what you need to know about how the U.S. credit rating works, what it means, and why it matters to you. Read more: This map highlights the average credit score in every state A national credit rating, also known as a sovereign credit rating, represents how likely a country is to repay its debts on time. Moody's, Standard & Poor's (S&P), and Fitch issue national credit ratings based on factors such as national debt and economic growth. For more than 70 years, the U.S. had an Aaa rating from Moody's, which signified to anyone who wanted to invest in the U.S. by buying bonds that the government was highly likely to repay that debt on time. But as of May, the U.S. government has an Aa1 rating from all three credit-rating agencies. The downgrade from Moody's is a reflection of economic problems in the U.S. — namely, increased tax cuts and spending are contributing to the growing national debt, which is now at over $36 trillion. Read more: How rising national debt can affect your finances Just like with personal credit, it becomes more expensive for governments to borrow money when their national credit rating drops. As a result of the downgrade, you may eventually see any number of these outcomes: Interest payments increase on the national debt and take up a larger portion of the national budget Cuts are made to government-supported programs Interest rates increase on new loans and credit cards Decrease in the value of the U.S. dollar For many Americans, the fiscal problems that led to the downgrade have already hit home. For example, you may have noticed higher interest rates on mortgages in recent years, or you've seen your retirement savings balance take a dip. In other words, the downgrade reflects both economic changes that have already happened and those that are anticipated to happen. If the U.S. fails to take measures to reduce the deficit, the fallout could be accelerated. Note: A rating lower than Baa1 by Moody's means the country's government debt is considered speculative, or "non-investment grade" — commonly referred to as "junk" status. Over the last 14 years, S&P, Fitch, and Moody's have all downgraded the U.S. from an Aaa to an Aa rating. Here's an overview of the three downgrades: 2011: S&P lowers the U.S.'s rating, stating that fiscal policies have become less effective and more unpredictable. 2023: Fitch downgrades the U.S. rating, citing the government's growing debt, as well as repeated standoffs related to the debt ceiling and last-minute resolutions. 2025: Moody's makes a downgrade in May 2025, stating that "federal spending has increased while tax cuts have reduced government revenues." Credit downgrades can set off a chain of events that eventually impact you as an individual. As a result of a downgrade, the government will pay higher interest rates on debt, which can increase the national deficit and, ultimately, cause more inflation. That's why it's important to be thoughtful and cautious about what you do with your money when the country's credit rating is downgraded. Instead of making impulsive moves, there are a few things you can do to prepare for the possibility of more economic instability: Make sure you're in a position to maximize your interest earnings on savings and investments. By doing so, you can minimize the effects of inflation on your finances. Here are a few ways to do that: Long-term savings: Invest in assets that are likely to earn interest or appreciate over time, such as real estate and a diverse portfolio of stocks. Mid-term savings: For money you don't need to spend for the next two years or more, look for fixed-rate assets to invest in, such as CDs and long-term Treasury bonds. Emergency savings: For funds you may need in case of emergencies, keep the money in a high-interest-earning account, such as a high-yield savings account, that you can access at any time. If you have debt with variable interest rates — meaning the rates can fluctuate according to market conditions — try to pay it off before rates increase. If you can't pay off the full balance, aim to reduce it by as much as possible. Accounts that typically have variable rates include credit cards and home equity lines of credit. If you're not sure how to tackle credit card debt and other variable-rate debt, consider using the debt avalanche method, which involves paying extra toward your debt with the highest interest rate until it's fully paid off, and then rolling your free funds to your account with the next-highest rate. Alternatively, you can consult with an NFCC-certified credit counselor to discuss strategies and programs that can help you eliminate debt.
Zawya
14-07-2025
- Business
- Zawya
Oman's return to investment grade is a national milestone
There are few moments in a nation's economic journey that genuinely signal a turning point. Oman's recent upgrade by Moody's to investment grade status — after nearly a decade below that line — is one of those moments. On July 11, 2025, Moody's Investors Service officially lifted the Sultanate's sovereign credit rating from Ba1 to Baa3, restoring the country's position among the world's most trusted borrowers. For the average citizen, that may sound technical. But for those tracking Oman's economic transformation over the past few years, it reads like a stamp of international confidence — earned through persistence, policy reform, and national vision. Unlike flashy economic turnarounds that make headlines with sudden oil booms or mega projects, Oman's comeback has been quiet, deliberate, and disciplined. Since the oil price crash of 2014, which rattled public finances across the Gulf, Oman has been steadily fixing its house — reducing debt, rationalising spending, and making every rial count. By the end of 2024, Oman had cut its public debt ratio to 35.5% of GDP, down from 37.5% just a year before — and significantly below the alarming levels of the early 2020s. More importantly, the government's grip on public spending has tightened. Public expenditure, which averaged 41% of GDP between 2016 and 2020, now sits at a leaner 29%. Even more impressive is the drop in Oman's fiscal break-even oil price — the point at which oil revenues cover government spending. From a risky USD 84 per barrel just a few years ago, that number has fallen to USD 70. That shift means Oman is less vulnerable to sudden oil market swings — a critical safeguard in a turbulent global economy. And the results don't stop there. The cost of debt servicing, which used to consume 9% of total revenues in 2021, was reduced to 7.2% in 2024. Meanwhile, real GDP grew by 1.7%, inflation stayed under control at 0.7%, and the country recorded both a fiscal surplus (2.8% of GDP) and a current account surplus (2.1%). These are not abstract achievements. They are the tangible outcomes of a government choosing the long road over the easy one — resisting quick fixes and instead building economic resilience brick by brick. Moody's didn't simply reward good numbers. The upgrade reflects a deeper shift: a belief that Oman's economic direction is sustainable and credible. That belief matters. Credit ratings influence how much governments pay to borrow money, how foreign investors assess risk, and how global markets perceive long-term economic health. Being rated investment grade means Oman is once again seen as a safe, stable, and forward-looking country — not just within the Gulf, but on the international stage. The recognition also brings renewed investor interest. From sovereign bond markets to foreign direct investment, Oman is now better placed to secure funding on more favourable terms — essential for pushing forward with large-scale infrastructure, energy transition, and industrial diversification plans. It would be easy to attribute this upgrade to a good year of oil prices or a temporary fiscal surplus. But that would miss the larger picture. Oman's return to investment grade is rooted in Vision 2040, the national blueprint launched to steer the Sultanate toward a more diversified, competitive, and inclusive economy. That vision has translated into real policy — from restructuring public finances and reforming state-owned enterprises, to promoting SMEs, tourism, logistics, green hydrogen, and technology. The fruits of these efforts are now beginning to show — not just in the rating agencies' assessments, but in the underlying fundamentals of the economy. In fact, the Moody's report echoes a message Omani policymakers have been emphasising for years: fiscal discipline, when paired with strategic diversification, works. It strengthens credibility, lowers risk, and creates space for long-term growth. Despite this success, Oman cannot afford to let its guard down. Moody's made clear that the road ahead will require continued fiscal prudence and faster progress in reducing reliance on oil revenues. The non-oil primary deficit — a key measure of underlying sustainability — still needs attention. Likewise, non-oil growth must become more robust to cushion any future shocks. This is where the next chapter begins. Investment grade should not be treated as a finish line, but as a launchpad. It gives Oman the global trust it needs to attract capital — but now the focus must shift to ensuring that growth is broad-based, digitally enabled, climate-conscious, and youth-driven. Perhaps the most important takeaway from this upgrade is not what it says about global markets — but what it says about Oman itself. In a region often viewed through the lens of oil dependency, Oman is charting a different course — one grounded in responsibility, reform, and realism. The Moody's upgrade is a recognition of that quiet confidence — and a reminder that economic credibility isn't claimed through promises; it's earned through choices. For investors, this is an invitation to look again at Oman. For citizens, it's a reassurance that the country is on firmer ground. And for policymakers, it is a moment of validation — and a reminder to keep going. Because in the end, ratings may change — but national vision endures. 2022 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (
Gulf Business
26-06-2025
- Business
- Gulf Business
UAE secures top sovereign credit ratings from major agencies
The UAE has received strong sovereign credit ratings from Fitch Ratings, S&P Global, and Moody's Investors Service, reflecting international confidence in its economic strength and fiscal policies, according to the state news agency WAM. S&P Global assigned the UAE a sovereign rating of 'AA' with a stable outlook on June 17. Moody's, in its annual review for 2025, affirmed the rating at 'Aa2' with a stable outlook. This consensus from all three major global credit rating agencies underscores the UAE's robust fiscal standing, positioning it among a select group of countries globally with strong sovereign credit ratings across the board. According to the report, Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance, stated that the ratings affirm 'deep-rooted international confidence in the resilience of our national economy and the efficiency of our fiscal policies.' He attributed this to a comprehensive economic vision led by UAE President Sheikh Mohamed bin Zayed Al Nahyan and supported by Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE and Ruler of Dubai. Sheikh Maktoum reaffirmed the UAE's commitment to implementing economic policies focused on diversification, transparency, and fiscal discipline, with an emphasis on increasing non-oil revenues and achieving financial sustainability. He noted that this reflects the integrated performance of government entities and long-term strategic planning, reinforcing the UAE's position as a flexible and credible global economic hub. He added that the Ministry of Finance remains committed to collaborating with government entities to enhance resource management efficiency, develop productive sectors, and improve the country's investment appeal. The development of the sovereign yield curve for the UAE dirham was highlighted as a significant milestone, enhancing market transparency and providing a reliable benchmark for pricing dirham-denominated debt instruments. This, he stated, strengthens the UAE's global economic presence and its ability to navigate regional and international challenges by expanding the investor base and enhancing its reputation as a reliable and attractive destination in global capital markets. Ratings confirm UAE's ability to diversify and drive non-oil sectors The ratings confirm the UAE's capacity to diversify and boost non-oil revenues, maintain sound fiscal discipline, manage risks effectively, and uphold prudent fiscal policies. These factors have positively contributed to economic stability and sustained growth across various sectors. S&P's report specifically cited the UAE's strong financial position and the strength of the government's consolidated sovereign assets. The agency anticipates that regional geopolitical tensions will have a limited overall impact on the UAE, citing the country's substantial sovereign wealth and consistent internal stability. Moody's report underscored the UAE government's ongoing efforts to expand and diversify non-oil revenue sources, support the development of non-oil sectors, and enhance the country's attractiveness to foreign investors and skilled talent. Despite persistent regional geopolitical tensions, the report noted that the UAE's effective policy frameworks help mitigate these challenges through ongoing economic diversification. Fitch's report, while acknowledging elevated geopolitical risks in the region, affirmed the This achievement serves as further evidence of the UAE's continued success in balancing fiscal stability with economic growth, reinforcing international investor confidence and affirming the UAE's status as a secure and stable destination for business and investment.
