Fitch estimates Abu Dhabi's foreign assets at $300bn

Fitch Ratings on Friday affirmed Abu Dhabi's long-term foreign and local currency issuer default ratings at 'AA' with a stable outlook.The ratings agency said the UAE capital had emerged from the 2008-2009 global slowdown "largely undented", with foreign assets estimated at $300bn."The affirmation and stable outlook reflects the continuing strength of Abu Dhabi's sovereign balance sheet, which conveys exceptional fiscal flexibility," said Richard Fox, head of Middle East and Africa Sovereigns at Fitch. "The 2008-2009 global financial crisis was a severe stress test for Abu Dhabi, but one which left its balance sheet largely undented. Any future stress would have to have harsher consequences than this to trigger negative rating action," Fox added. Abu Dhabi's rating is anchored by one of the strongest balance sheets of any rated country, Fitch added.Foreign assets, including equity investments, are estimated by Fitch at approaching $300bn, with just $4bn of direct sovereign external debt.Sovereign net foreign assets of an estimated 167 percent of GDP are second only to Kuwait, Fitch said. The agency said it estimates gross sovereign financial assets by the end of 2011 will be 16 percent higher than their end-2007 level, having dipped only slightly in 2008. At current oil prices, they are forecast to rise steadily, propelled by investment returns and overall fiscal surpluses.The agency also said it forecasts a double digit percentage of GDP surplus this year, based on higher oil prices and production and contained spending. "Overall spending was essentially unchanged last year and is budgeted to fall this year, although this may prove ambitious. Some investment projects have been scaled back and others are under review," Fitch said."The objective of diversifying the economy remains, but will likely take place at a more measured pace from now on. Non-oil real GDP growth will therefore likely slow from the 5 percent pace estimated for 2009-2010," it added.