Moody's Affirms Saudi Arabia's Aa3 Rating, Stable Outlook

Saudi Arabia has kept its high investment-grade sovereign credit standing after Moody's affirmed the Kingdom's long-term rating at Aa3 with a stable outlook on 23 May 2026. The move is a confirmation rather than an upgrade or downgrade, following the earlier upgrade to Aa3 in November 2024.

Aa3 sits at the fourth-highest notch on the long-term sovereign scale and is broadly comparable to AA- on other major rating scales. The affirmation cited the Kingdom's large and wealthy economy, its vast hydrocarbon resources, a competitive position in global energy markets, and improving institutional and policy effectiveness under رؤية السعودية 2030. A stable outlook signals that a rating change is not expected over roughly the next one to two years.

Why the rating held

Analysts pointed to strong fiscal buffers, low government debt ratios, and sizeable foreign exchange and sovereign wealth assets. The government debt burden for 2026 was estimated in the low-30% of GDP range (about 32%), projected to rise toward roughly 40% over the medium term while remaining moderate by international standards.

Progress on economic diversification and structural reforms — including judicial, business, and social changes, alongside growth in services and non-oil sectors — was also highlighted, together with resilience to regional and trade risks supported by oil export flexibility through the East-West pipeline and البحر الأحمر terminals.

On growth, non-hydrocarbon private sector output is expected to return to around 4–5%, among the strongest in the Gulf. A temporary real GDP contraction of about 1.7% is forecast for 2026, linked to a roughly 10% drop in oil output, followed by a rebound in later years. For comparison, other major agencies place Saudi Arabia at A+ with a stable outlook — one level below Moody's but still firmly investment grade.

For residents and investors, a stable high-grade rating supports lower borrowing costs and steady confidence in the Kingdom's fiscal path as diversification continues.

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