(The following statement was released by the rating agency)
Apr 05 - Fitch Ratings has affirmed the Emirate of Ras al Khaimah’s (RAK) Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘A’ with Stable Outlooks. The Short-term foreign currency IDR is affirmed at ‘F1’. The Country Ceiling is ‘AA+’ (equal to the UAE Country Ceiling).
“Ras al Khaimah continues to make steady progress reducing an already modest debt burden, executing a focussed development strategy, and improving data quality to track progress,” says Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. “Debt is edging down closer to 20% of GDP and the economy has recovered well from the global and regional crisis, showing an impressive ability to diversify markets and attract foreign investment.”
Public finances and macroeconomic performance are the main rating drivers for RAK. As the fourth-largest emirate within the UAE, RAK benefits from the federal government’s (FG) provision of basic social and physical infrastructure, as well as the UAE’s monetary and exchange rate arrangements. The UAE Country Ceiling is ‘AA+', underpinned by the external assets and oil wealth of the largest emirate, Abu Dhabi (‘AA’/Stable). RAK’s external position is therefore not a constraint on its foreign currency IDR as RAK can obtain foreign currency in exchange for dirhams from the UAE central bank on demand and does not need its own foreign currency reserves. However, the rating does not factor in special support from the FG that might be provided if needed, even though that would likely be forthcoming if requested.