Record low borrowing costs are buoying Gulf issuers' credit quality-for now

According to a report titled "Record Low Borrowing Costs Are Boosting Gulf Issuers' Credit Quality, But Will They Last?", published by Standard & Poor's, corporate and infrastructure issuers in the Gulf region are benefitting from sustained positive macroeconomic fundamentals and strong appetite from regional and international investors. Moreover, GDP growth of 4% and above in 2013 is expected for most of the GCC nations. All GCC sovereigns have stable outlooks. The key risks to this rosy picture are an escalation in regional political instability or an unexpected fall in oil prices. Fortunately, these risks are negatively correlated, with any threat to supplies of hydrocarbons normally resulting in immediate price hikes.