Saudi Arabia Hit With S&P Credit Downgrade On Weak Oil

Standard & Poor's Ratings Services on Friday lowered Saudi Arabia's long-term foreign currency sovereign credit rating to A+ from AA-, citing a widening budget deficit resulting from weaker oil prices. The ratings agency projected the country's fiscal shortfall will jump to 16% of gross domestic product this year from 1.5% in 2014. S&P said it expects Saudi Arabia to draw down its fiscal assets and issue debt to finance its deficit, though the country does not have much monetary-policy flexibility given the riyal's peg to the U.S. dollar. "The outlook remains negative, reflecting the challenge of reversing the marked deterioration in Saudi Arabia's fiscal balance," said S&P.