Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Moody’s Ratings has affirmed the Government of Abu Dhabi and the Government of the UAE’s long-term local and foreign currency issuer ratings at Aa2, with a stable outlook, reflecting the strength and resilience of their credit profiles.
Moody’s has also affirmed Abu Dhabi’s foreign currency senior unsecured debt ratings at Aa2 and its short-term local and foreign currency issuer ratings at P-1. For the UAE, Moody’s affirmed the foreign currency senior unsecured debt and medium-term note programme ratings at Aa2 and (P)Aa2, respectively.
A long-term local and foreign currency issuer rating is Moody’s assessment of a government’s ability to meet its financial obligations over the long term, whether those obligations are in domestic or foreign currency.
A foreign currency senior unsecured debt rating refers to the credit risk of debt issued in foreign currency that is not backed by specific collateral but ranks ahead of subordinated obligations.
A short-term local and foreign currency issuer rating assesses the government’s ability to meet short-term obligations in local and foreign currency.
Moody’s long-term rating scale begins at Aaa, the highest rating, followed by Aa, A, Baa and lower categories. Ratings in the Aa category are judged to be of high quality and subject to very low credit risk.
Moody’s uses the numbers 1, 2 and 3 within rating categories from Aa to Caa, with 1 indicating the higher end, 2 the mid-range and 3 the lower end of the category. Therefore, Aa2 places Abu Dhabi and the UAE in the middle of the Aa category, one notch below Aa1 and one notch above Aa3.
Moody’s short-term scale includes P-1, P-2, P-3 and NP, with P-1, or Prime-1, indicating a superior ability to repay short-term obligations. The “(P)” attached to the UAE’s (P)Aa2 MTN programme rating refers to a provisional rating assigned to a programme or expected issuance structure.
“The affirmation at Aa2 reflects Abu Dhabi’s exceptionally large financial assets, which far exceed total debt across the central government and wider public sector,” Moody’s said.
The rating agency said Abu Dhabi’s substantial hydrocarbon endowment and very high per capita income further support the durability of its net creditor position over the long term, providing significant shock absorption capacity and continuity of debt service.
Moody’s said the stable outlook reflects its expectation that Abu Dhabi’s credit profile will remain resilient despite significant disruptions to trade flows through the Strait of Hormuz and the ongoing regional situation, assuming no further significant damage to production capacity.
The agency said Abu Dhabi’s established alternative route for oil exports through the Habshan-Fujairah pipeline, together with very large fiscal buffers, supports its capacity to withstand external shocks. Moody’s estimated that Abu Dhabi’s government financial assets exceeded 300% of GDP in 2025.
Despite the challenging regional backdrop, Moody’s said Abu Dhabi’s non-oil economy is expected to remain relatively resilient, supported by sustained government spending and ongoing diversification and infrastructure projects, including Etihad Rail and the second Fujairah pipeline.
Moody’s said Abu Dhabi’s government debt burden is expected to remain moderate at around 22% of GDP in 2026, below most similarly rated peers and supported by very large government financial assets.
On the UAE, Moody’s said the affirmation at Aa2 reflects the country’s high per capita income, diversified economy, shock absorption capacity, robust institutions, and effective policymaking that underpin ongoing progress on economic diversification, as well as the federal government’s very low debt burden.
The rating agency said the UAE’s credit profile benefits from substantial government financial assets and buffers, accumulated over years of budget surpluses, and access to the Emirates Investment Authority, whose assets are partially liquid and accessible.
Moody’s said the federal government also benefits from Abu Dhabi’s support in case of need, noting the importance of Abu Dhabi’s balance sheet and its government financial assets, which exceed 300% of the emirate’s GDP.
The UAE’s stable outlook reflects Moody’s expectation that the country’s credit profile will remain resilient to the ongoing regional situation and temporary disruption of trade flows through the Strait of Hormuz, supported by strong fiscal and financial buffers.
The agency said the UAE’s ability to continue exporting hydrocarbons through alternative routes, combined with substantial federal government financial assets, underpins its capacity to absorb the economic and fiscal impact of the shock.
Moody’s expects federal debt to remain very low at around 3–4% of GDP. It said the federal government, if necessary, could delay selected investments and reforms to contain spending, while its top-down governance framework allows the Cabinet to respond quickly, including through contingency reserves.
The agency also affirmed that the UAE’s local and foreign currency country ceilings remain unchanged at Aaa, the highest level on Moody’s scale. It said the country’s effective and forward-looking institutions, very strong external accounts position, ample foreign exchange reserves and Abu Dhabi’s large foreign-currency government financial assets support the ceilings.
Moody’s said no default events on bonds or loans have been recorded for Abu Dhabi or the UAE since 1983.
