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Fitch downgrades Saudi Arabia's IDRs

Fitch Ratings on April 12 downgraded Saudi Arabia'slong-term foreign- and local-currency issuer default ratings to AA- from AA.The outlook on the ratings remains negative.

Fitch said one of the reasons for its decision was the downwardrevision of its oil price assumptions for 2016 and 2017 to $35 per barrel and$45 per barrel, respectively, which has major negative implications for SaudiArabia's fiscal and external balances.

In addition, the country's central government deficitwidened to 14.8% of GDP in 2015 from 2.3% in 2014, and Fitch expects thedeficit-to-GDP ratio to narrow only marginally in 2016 and more substantiallyin 2017.

The rating agency said another reason for the downgrade wasthat Saudi Arabia's sovereign net foreign asset position will decline sharplyto 78% of GDP in 2017 from 113% in 2014. It also noted that while the country'sreal GDP grew 3.4% in 2015, growth will slow to 1.5% in 2016 and 1.7% in 2017.

Fitch added that Saudi Arabia's banking sector remainshealthy, although the weaker economic climate has started to affectprofitability, with the return on equity falling to 14.5% in the fourth quarterof 2015, the lowest since 2013.