Fitch Report on GCC Sovereign Wealth Funds: useful figures and analysis

Rating agency Fitch has produced a useful analysis of GCC Sovereign Wealth Funds (SWFs) in the GCC, dated 17 December.

As a rating agency, Fitch is particularly interested in the extent of funds’ foreign assets that could be deployed to support government fiscal policy. It estimates that the Kuwait Investment Authority had foreign assets of more than $560bn at the end of 2019; that the Abu Dhabi Investment Authority had foreign assets under management (AUM) of $580bn, and that the Qatar Investment Authority had foreign AUM of $250bn.

Fitch’s rating analysis takes into account assets held by other bodies, such as Saudi Arabia’s Public Investment Fund and its central bank; and Abu Dhabi’s Mubadala Investment Fund. These other asset holders are often significant although they often also have debt at both holding company and subsidiary levels. 

Fitch estimates that Kuwait’s (total) net foreign assets amount to 607% of GDP in 2020, compared to 253% for Abu Dhabi, and 161% for Qatar.

Commenting on assets held outside the formal SWFs, Fitch notes:

• Public Investment Fund, Saudi Arabia: most recent public figure for assets is $261bn, of which the market value of listed local equity holdings was $147bn at the end of 2017. PIF also received a transfer of $40mn from SAMA this year and will be receiving annual transfers of $69mn from Saudi Aramco until 2028. Fitch estimates that holding company debt was $21bn at the end of 2019 and subsidiaries’ debt was $80bn.

 

• Mubadala Investment Company, Abu Dhabi: assets under management reported at around $290bn and debt of about $41bn.

 

• Investment Corporation of Dubai: book value of equity was $68bn at the end of 2019, mostly local. Consolidated debt, including funding for subsidiary banks, was $82bn.

 

• Mumtalakat, Bahrain: total assets of about $17bn, comprising mainly local domestic entities such as Aluminium Bahrain, and consolidated debt of about $7bn.

 

• Oman Investment Authority: created in 2020 through the merger of the State General Reserve Fund, Oman Investment Fund and OQ, the petroleum holding company. Total assets of about $43bn in mid-2020 of which about $20bn was foreign.

 

The Fitch report also considers the pace at which foreign holdings could be depleted, given baseline and stressed scenarios. The analysis shows how difficult such predictions are – and Fitch recognizes this. However, Fitch believes that Kuwait’s resources will remain substantial, even under adverse scenarios. Its analysis also shows how important the North Field production expansion will be for Qatar’s long-term prosperity. 

 

The full report is attached below. 

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