This report does not constitute a rating action.

We expect Gulf Cooperation Council (GCC) governments will maintain a controlling stake in most strategic government-related entities (GREs) and continue to provide extraordinary support if necessary. GREs play a crucial role in GCC sovereigns' diversification away from the hydrocarbon sector. We expect government and public investments will spur non-oil growth in the Gulf region to, on average, more than 3% over 2025-2028. To finance the required investments, we expect GCC GREs will raise more debt through domestic and regional banks, international capital markets, and by listing on regional equity markets.

Here, S&P Global Ratings presents frequently asked questions from investors about how we view sovereign support for GREs in the GCC region and how this support could affect GCC sovereign ratings.

Frequently Asked Questions

Which GREs do you rate in the GCC region? 

As of February 2025, we rate 22 GCC GREs, which operate across multiple key sectors in their respective countries (see table 1). When assigning ratings to GREs, we use our "Rating Government-Related Entities: Methodology And Assumptions" criteria, published on March 25, 2015. We apply sector-relevant corporate criteria when assigning the stand-alone credit profile (SACP).

Table 1

Ratings on government-related entities in the Gulf Cooperation Council region
Government-related entity	Sector	Sovereign	Sovereign local currency rating	Likelihood of extraordinary government support	Role to the govt.	Link to the govt.	SACP	Issuer credit rating	Notches above/below the SACP*
Mamoura Diversified Global Holding PJSC	Investment holding company	Abu Dhabi	AA	Almost certain	Critical	Integral	NR	AA	N.A.
QatarEnergy	Energy	Qatar	AA	Almost certain	Critical	Integral	aa	AA	N.A.
Saudi Electricity Company	Utilities	Saudi Arabia	A	Almost certain	Critical	Integral	bbb-	A	4
Bahrain Mumtalakat Holding Co.	Investment holding company	Bahrain	B+	Almost certain	Critical	Integral	NR	B+	N.A.
Emirates Development Bank PJSC	Financial institutions	UAE	NR	Almost certain	Critical	Integral	NR	AA	N.A.
Industries Qatar QSC	Industrials: Capital goods	Qatar	AA	Extremely high	Very important	Integral	bbb+	AA-	4
Saudi Real Estate Refinance Company	Financial institutions	Saudi Arabia	A	Extremely high	Very important	Integral	bb+	A-	4
First Abu Dhabi Bank P.J.S.C.	Financial institutions	Abu Dhabi	AA	Very high	Very important	Very strong	a-	AA-	2
Qatar National Bank (Q.P.S.C.)	Financial institutions	Qatar	AA	Very high	Very important	Very strong	bbb	A+	4
Abu Dhabi Commercial Bank PJSC	Financial institutions	Abu Dhabi	AA	High	Important	Very strong	bbb	A	3
Ooredoo Q.P.S.C.	Telecom services	Qatar	AA	High	Important	Very strong	bbb	A	3
Saudi Basic Industries Corp.	Chemicals	Saudi Arabia	A	High	Important	Very strong	a+	A	-1
Saudi Telecom Co.	Telecom services	Saudi Arabia	A	High	Important	Very strong	a+	A	-1
Emirates Telecommunications Group Company PJSC (Etisalat) (e&)	Telecom services	UAE	NR	High	Important	Strong	aa-	AA-	0
Abu Dhabi Crude Oil Pipeline (ADCOP)	Infrastructure	Abu Dhabi	AA	Moderately high	Important	Strong	aa	AA	0
Ruwais Power Company PJSC	Infrastructure	Abu Dhabi	AA	Moderately high	Important	Strong	bbb-	BBB+	2
Emirates SembCorp Water and Power Co.	Infrastructure	Abu Dhabi	AA	Moderately high	Important	Strong	bbb+	A-	1
Sweihan PV Power Company PJSC	Infrastructure	Abu Dhabi	AA	Moderately high	Important	Strong	bbb-	BBB+	2
QatarEnergy LNG	Infrastructure	Qatar	AA-	Moderately high	Important	Strong	aa-	aa-	0
Energy Development Oman SAOC	Energy	Oman	BBB-	Moderately high§	Very important	Integral	bbb-	BBB-	0
Bahrain Telecommunications Co. (Beyon B.S.C.)	Telecom services	Bahrain	B+	Moderately high	Limited importance	Very strong	bb+	B+	-3
Almarai	Consumer goods	Saudi Arabia	A	Low	Limited Importance	Weak	bbb-	BBB-	0
*GRE ratings are generally capped by the rating on the related government. §Likelihood of support is capped at moderately high because we consider the correlation between the GREs' SACP and the sovereign rating is high. N.A.--Not available. NR--Not rated. SACP--Stand-alone credit profile. Source: S&P Global Ratings.

What are the main characteristics of rated GCC GREs? 

GREs usually serve a specific policy role, or provide a key product or service to the population. We often add one or more notches of uplift above the SACP. Most rated GREs in the GCC region are part of key sectors, such as financial institutions, infrastructure (specifically projects), energy, utilities, and telecom services.

Due to GCC governments' economic diversification plans and investment needs, we assess nationally strategic and monopolistic GREs as almost certain to receive extraordinary support from the government if they focus on critical infrastructure or public services, and if they are an extension of, or tightly controlled by, the government. Conversely, our expectation of the likelihood of extraordinary government support decreases for companies that face competition from private sector players and are not strategically important to the government or are in early stages of development.

We view GCC governments as generally supportive of their GREs in times of financial stress, based on their track records. For example, in Saudi Arabia, the government supported the Saudi Electric Company (SEC; A/Positive/--) through several ways, including interest-free loans, until the power sector reform in 2020. Thereafter, the SEC restructured various dues to the government into a Mudaraba instrument, which is an equity-like loan instrument. In 2011, real estate company Aldar (not rated) received extraordinary support from Abu Dhabi's government, which provided $10 billion in funds, including asset repurchases. Oman's government provided sovereign guarantees on oil company OQ's (not rated) and Oman Air's (not rated) debt, while Gulf Air (not rated) received multiple capital injections from the government of Bahrain. In some cases, GCC governments' reasoning for supporting some GREs, but not others, was unclear.

Only occasionally do we provide rating uplift to project finance entities. This is because governments typically award a concession or contract that is based on a project finance structure to shift construction and operating risks to private enterprises. We classify project finance deals--for example some projects in Abu Dhabi and Qatar--as GREs if we think that the project could be affected by extraordinary government intervention, based on the government's past actions.

In the case of GREs' subsidiaries--for example petrochemical company EQUATE (BBB/Stable/--), which is 42.5% owned by Kuwait Petroleum Company (not rated), or energy company Moeve (formerly Cepsa, BBB-/Negative/A-3), which is 61.5% owned by Mubadala (its subsidiary Mamoura is rated AA/Stable/--) in Abu Dhabi--we usually evaluate their strategic importance to the parent entity. In line with our group rating methodology, we then either equalize the rating with the group entity rating, or we provide additional notches of uplift to the subsidiary's SACP to incorporate potential group support. If we assess that the subsidiary could likely receive extraordinary support directly from the government instead of the holding company, we use the GRE criteria.

How do you define contingent liabilities in the context of sovereign ratings? 

In our sovereign ratings analysis, contingent liabilities are either related to financial institutions, nonfinancial public-sector enterprises (NFPEs), or guarantees and off-budget items. We view financial institutions-related contingent liabilities in the GCC region as limited. This is based on the relatively small size of the banking sectors--which account for less than 260% of the region's GDP--and comparatively low banking sector risks, as demonstrated by our Banking Industry Country Risk Assessments (BICRAs). Our BICRA score is 4 for Saudi Arabia and Kuwait, 5 for the UAE and Qatar, 6 for Oman, and 7 for Bahrain. NFPE-related contingent liabilities largely relate to corporate GREs that are partly or completely under government control and that we believe are likely to benefit from extraordinary government support in case of financial stress.

How do NFPE-related contingent liabilities affect sovereign ratings? 

When we assess sovereigns' NFPE-related contingent liabilities, we look at the key strategic GREs in the country and assess their size, debt levels and credit profile, and governments' willingness to support them. If we consider that a government is likely to bail out a GRE in the case of financial stress, we could view the exposure to the GRE as a contingent liability for the sovereign, even if no formal government guarantee exists.

Currently, we do not view GCC sovereigns' exposure to contingent liabilities as material for any GCC sovereign rating.

Over 2020-2024, we assessed NFPE-related contingent liability risk as moderate for Oman and applied a negative adjustment to the debt assessment. Following significant public sector deleveraging and the improving financial performance of key GREs, such as OQ, we removed the adjustment in 2024, which supported an upgrade of Oman (BBB-/Stable/A-3). Other sovereigns whose creditworthiness is affected by contingent liabilities include China, Ethiopia, Ghana, Korea, Montenegro, Mozambique, South Africa, Taiwan, and Tajikistan.

What is GCC sovereigns' exposure to NFPE-related contingent liabilities? 

GCC governments' contingent liabilities are currently relatively small, considering the governments' financial resources or the size of the GDP. In the absence of comprehensive data for some sovereigns, we calculate contingent liabilities by compiling publicly available debt figures of some of the largest GREs. We do not consider certain GREs' debt in contingent liabilities if their SACP (or standalone creditworthiness if unrated) is close to or above the sovereign rating as it reduces the risk of their debt materializing on the government's balance sheet. For example, we do not view the debt of Oman-based oil and gas companies EDO (BBB-/Stable/--) and OQ (unguaranteed debt), and of Qatar-based QatarEnergy (AA/Stable/--) as contingent liabilities for the respective sovereigns.

In our calculations, Abu Dhabi has the highest estimated exposure to contingent liabilities as a percentage of GDP (see table 2), but this includes debt of other emirates in the UAE, given its support of Dubai in 2009. We believe these risks are mitigated by Abu Dhabi's significant asset buffers and do not weigh on the emirate's creditworthiness.

Although Saudi GREs' leverage will increase due to the government's Vision 2030 commitments, we expect it will continue to account for only a small proportion of Saudi Arabia's GDP. Because of this and the Saudi government's strong net public sector asset position of over 50% of GDP, we do not expect that Saudi GREs' leverage will weigh on the sovereign's credit quality.

Table 2

GCC sovereigns' estimated NFPE-related contingent liabilities in 2024
	Contingent liabilities (% of GDP)	Direct government guarantees (% of GDP)	Net public sector debt/assets (% of GDP)
Abu Dhabi	47.0	2.2	(277.0)
Qatar	18.7	2.6	(91.0)
Oman	18.2	5.0	6.7
Bahrain	7.2	N/A	133.0
Saudi Arabia	4.4	0.5	(56.0)
Kuwait	N/A	N/A	(468.0)
GCC--Gulf Cooperation Council. N/A--Not available. NFPE--Nonfinancial public-sector enterprise. Source: S&P Global Ratings.

How do you incorporate the strength of GREs, such as sovereign wealth funds, in sovereign ratings? 

Sovereign wealth funds in the GCC region have accumulated a lot of assets, thanks to historical fiscal surpluses during years of favorable commodity prices. Some sovereign wealth funds, for example the Kuwait Investment Authority, aim to build wealth for future generations, while others, such as Saudi Arabia's Public Investment Fund (PIF) or the Qatar Investment Authority, focus on economic diversification and development, as well as generating financial returns. If we expect that the assets in the sovereign wealth funds are available to the sovereign in case of need, we incorporate the funds' liquid assets in our calculation of general government assets. If these sovereign wealth funds, such as the PIF, also hold significant debt amounts, we adjust for debt and include their net liquid assets in our calculation of general government assets.

Related Research

• Banking Industry Country Risk Assessment Update: January 2025, Jan. 30, 2025
• Oman Upgraded To 'BBB-' From 'BB+' On Continued Public Sector Deleveraging; Outlook Stable, Sept. 27, 2024
• Sovereign Rating Methodology, Dec. 18, 2017
• Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015

Primary Contact:	Zahabia S Gupta, Dubai 971-4-372-7154; zahabia.gupta@spglobal.com
Secondary Contacts:	Dhruv Roy, Dubai 971-0-56-413-3480; dhruv.roy@spglobal.com
	Sapna Jagtiani, Dubai 971-0-50-100-8825; sapna.jagtiani@spglobal.com
Contributor:	Arnaud Buttin, Paris ; arnaud.buttin@spglobal.com