Moody's downgrades Sharjah

Moody's Investors Service said it downgraded the long-term foreign- and local-currency issuer and the foreign-currency senior unsecured ratings of the government of Sharjah to Ba1 from Baa3 and changed the outlook to stable from negative.

“The downgrade to Ba1 is driven by Moody's expectation of further significant deterioration in Sharjah's fiscal strength over the next few years, and the absence of a credible fiscal adjustment plan that would arrest and eventually reverse the upward trend in the emirate's debt burden and the weakening of its debt affordability metrics. This demonstrates weaker governance and in particular a lower level of fiscal policy effectiveness than previously assessed,” the agency said in a press release.

The improved outlook reflects the view that at the Ba1 level the risks to Sharjah's ratings are balanced, the agency noted.

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