S&P Global Ratings projected the aggregate long-term sovereign borrowing from commercial sources by the 13 rated countries in the Middle East & North Africa (MENA) region at $135.7bn in 2019, which would constitute an increase of 24.7% from $108.8bn in 2018. It attributed the increase to lower oil prices, which will not help the Gulf Cooperation Council (GCC) countries reduce their fiscal deficits. Saudi Arabia would account for 21.6% total commercial long-term borrowing in 2019 compared to 27.2% last year, followed by Egypt (20.4%), Lebanon (14%) and Kuwait (11.3%). S&P said that $60bn, or 44.1% of total sovereign borrowing, would refinance maturing long-term debt, which would result in net borrowing requirements of $76bn in 2019. In parallel, S&P forecast the total sovereign commercial debt stock of the 13 countries, when excluding bilateral and multilateral debt, at $891.6bn at the end of 2019 relative to $806.1bn at end-2018, consisting of $723bn in medium- and long-term debt and $169bn in short-term debt. Egypt would account for 25.6% of the commercial debt stock, followed by Saudi Arabia (19.5%), Qatar (10.7%), Lebanon (10%) and Iraq (8.9%). Further, gross long-term sovereign commercial borrowing would be equivalent to 6.1% of the aggregate GDP of the 13 economies in 2019, while the total sovereign debt stock from commercial sources would be equivalent to 40.1% of their GDP at end-2019.
Source: S&P Global Ratings

S&P Global Ratings affirmed at 'B-/B' Iraq's long- and short-term foreign and local currency sovereign credit ratings, with a 'stable' outlook. It noted that the ratings are constrained by the country's nascent political institutions, domestic political tensions, ongoing security risks, low GDP per capita and weak economic activity. However, it said that the ratings are supported by the concentration of the majority of Iraq's oil fields in areas under the control of the federal government. S&P considered that the recently announced 2019 budget reflects the unpredictability of Iraq's policymaking, as it incorporates several concessions to limit the risk of public discontent and to address substantial reconstruction needs, which would result in an increase of 20% in public spending this year. As such, it expected the International Monetary Fund to suspend the disbursement of funds in the near future, due to the country's non-adherence to the IMF's arrangement. It projected the fiscal balance to shift from a surplus of 4% of GDP in 2018 to a deficit of 6% of GDP in 2019, based on its lower oil price assumption and in the absence of other official sources of funding. Also, it anticipated the public debt level to increase from 66.1% of GDP at the end of 2019 to 70.1% of GDP by end-2022. It noted that the government plans to finance its 2019 deficit through a mixture of short-term domestic financing, such as utilizing assets accumulated from the 2018 fiscal surplus, increasing the pension fund's holdings of government securities, as well as tapping official and bilateral funding sources. Further, it forecast the current account surplus to narrow from 12.8% of GDP in 2018 to 5.7% of GDP in 2019, on the back of lower oil export receipts. 
Source: S&P Global Ratings

Fitch Ratings affirmed the long-term Issuer Default Rating (IDR) of Arab Bank at 'BB', and the long-term IDRs of Jordan Islamic Bank (JIB) and Bank of Jordan (BOJ) at 'BB-', with a 'stable' outlook. Also, the agency affirmed the Viability Rating (VR) of Arab Bank at 'bb' and the VRs of JIB and BOJ at 'bb-'. It indicated that the banks' IDRs are driven by their standalone credit profiles. It added that the ratings of JIB and BOJ are constrained by Jordan's challenging operating environment. However, it pointed out that Arab Bank's IDR is constrained but is not capped by Jordan's sovereign risks, given that its operations outside the MENA region would help offset the impact of a potential sovereign crisis. Further, it considered that JIB's and BOJ's VRs reflect their solid domestic franchises, sound asset quality and adequate capital buffers. It added that Arab Bank's VR is mainly supported by the bank's geographic diversification, sound asset quality and solid capital ratios. In parallel, Capital Intelligence Ratings affirmed at 'BB-' the long-term foreign currency ratings (FCRs) of Jordan Kuwait Bank (JKB), Arab Jordan Investment Bank (AJIB) and Investbank (IB), with a 'negative' outlook. It noted that the banks' FCRs are constrained by Jordan's sovereign ratings, given their high exposure to the sovereign and to the Jordanian market. Further, it affirmed at 'BBB' the Financial Strength Rating (FSR) of JKB and AJIB, and at 'BB+' that of IB. It noted that the FSR of JKB is supported by the bank's sound capitalization and adequate operating profitability, but is constrained by weakening asset quality. It added that AJIB's FSR reflects the bank's good asset quality, sufficient liquidity and sound capital adequacy ratio.
Source: Fitch Ratings, Capital Intelligence Ratings