Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings has affirmed Abu Dhabi’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at “AA” with a Stable Outlook, citing the emirate’s strong fiscal position and external buffers.
“The rating affirmation reflects Abu Dhabi's high GDP per capita and very strong fiscal and external metrics,” the ratings agency said.
An “AA” rating indicates very strong capacity to meet financial obligations, two notches below the highest “AAA” rating. The IDR (Issuer Default Rating) reflects the overall creditworthiness of a sovereign—essentially its ability to repay debt in foreign currency. A Stable Outlook means the rating is unlikely to change in the near term.
Referring to recent disruptions, Fitch said: “Abu Dhabi's export revenues are likely to remain close to pre-war forecasts, as higher prices and exports via Fujairah offset lower volumes through the Strait of Hormuz.”
The agency noted that crude oil accounts for the bulk of Abu Dhabi’s exports and that the emirate’s oil export infrastructure is less vulnerable to long-term damage compared to more concentrated downstream or liquefied natural gas (LNG) facilities.
Fitch expects the government to increase financial support for key government-related entities (GREs), particularly in sectors affected by the disruption, to ensure their financial stability while they absorb higher costs.
Despite these pressures, Abu Dhabi’s fiscal position remains strong. The agency projects the general government surplus, including income from the Abu Dhabi Investment Authority (ADIA), to narrow to 3.0% of GDP in 2026. Excluding ADIA’s investment income, a deficit of 2.2% is expected—the first since 2020.
Revenues will benefit from corporate income tax proceeds, which were collected on 2023-2024 corporate performance, Fitch Ratings said.
Government debt stood at 19.5% of GDP at the end of 2025, significantly below the peer median of 50.3%, and is projected to rise to 25.3% in 2026 due to higher borrowing before stabilising after the conflict. Fitch expects Abu Dhabi to raise debt in local currency to support the domestic debt market and may refinance upcoming external debt maturities.
Abu Dhabi’s balance sheet remains exceptionally strong, with sovereign net foreign assets—largely held by ADIA—estimated at 291% of GDP at end-2025, far exceeding the ‘AA’ median of 45.4%.
While the emirate carries relatively high contingent liabilities due to its role as a financial backer of the UAE and its reliance on GREs to fund long-term projects, Fitch considers these risks manageable given strong fiscal buffers and the generally profitable nature of these entities.
The report also highlighted the resilience of Abu Dhabi’s banking sector, noting that major lenders such as First Abu Dhabi Bank and Abu Dhabi Commercial Bank maintain liquid assets-to-deposits ratios above 30%, providing significant buffers against potential shocks.
"Abu Dhabi's flagship banks have limited concentration in corporate real estate and would retain ample liquidity buffers in a stress scenario,” the rating agency said.
Fitch added that Abu Dhabi’s Country Ceiling, which reflects the highest rating assignable to private-sector entities in the jurisdiction, is aligned with that of the UAE at “AA+”, indicating a low risk of transfer and convertibility restrictions.
