Saudi Aramco's robust financial position has been reaffirmed by leading credit rating agencies Moody's and Fitch. Both agencies have assigned strong ratings to the energy giant's newly established $10 billion US Commercial Paper Program, reflecting its exceptional creditworthiness and strong liquidity.

Moody's assigned a Prime-1 short-term issuer rating to Aramco and reaffirmed its Aa3 long-term issuer rating with a stable outlook. This reflects the company's proven ability to meet its financial obligations, underpinned by its strong cash flow generation and conservative financial policies.

Fitch Ratings awarded an F1+ short-term rating, highlighting Aramco's strong intrinsic capacity for timely payments and its resilience in the face of market fluctuations.

Aramco established the $10 billion US Commercial Paper Program to issue short-term debt instruments with maturities of up to 270 days. Commercial paper is a common financing tool for corporations to fund short-term obligations and manage cash flow.

Strong Liquidity and Cash Position

Moody's highlighted Aramco's excellent liquidity, noting that its consolidated cash balance and operational cash flow are more than sufficient to cover debt maturities, investment commitments, and dividends over the next 12-18 months. As of September 30, the company held $69 billion in cash and cash equivalents.

Moreover, Moody's projected that Aramco is expected to generate $180 billion in funds from operations through March 2026. This is sufficient to cover $16 billion in debt maturities, $85 billion in capital spending, and a substantial $140 billion in dividends over the same period.

Downstream Integration and Low Production Costs

Fitch Ratings echoed similar confidence, emphasizing that Aramco's financial profile is bolstered by its conservative financial policies, low production costs, and strong pre-dividend free cash flow. The agency highlighted the company's strong business profile, characterized by large-scale production, vast reserves, and significant downstream integration into refining and petrochemicals.

Government Support and Sovereign Link

Both agencies acknowledged the strong link between Aramco's ratings and those of the Saudi Arabian government. Moody's emphasized that Aramco's Aa3 rating reflects the Kingdom's solid credit standing, recently upgraded to Aa3 by the agency. Any changes in the sovereign rating would directly impact Aramco's ratings.

Similarly, Fitch noted that Saudi Arabia's A+ sovereign rating underscores the Kingdom's strong capacity for financial commitments and its ability to provide support to Aramco if needed, although historical evidence suggests that government support has not been necessary due to Aramco's robust financial position.

Adaptability and Dividend Policy

Both agencies acknowledged Aramco's capacity to adapt to market conditions, particularly its ability to adjust dividend commitments in response to oil price fluctuations. In 2024, Aramco delivered a base dividend of $81.2 billion, supported by its strong operating cash flow.

Conclusion

The strong ratings from Moody's and Fitch reaffirm Aramco's position as a global energy leader with a robust financial foundation. These ratings provide a strong endorsement of the company's creditworthiness and its ability to navigate the evolving energy landscape successfully.

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