Fitch: Robust Sovereign Support to Drive Majority of GCC Islamic Bank Ratings

All Issuer Default Ratings (IDRs) of Islamic banks assigned by Fitch Ratings (Fitch) in Gulf Cooperation Council (GCC) countries are considered to be investment grade, indicating relatively low to moderate credit risk, according to a recent report released by the credit rating agency titled ‘GCC Islamic Banks: 2020 Compendium’.

According to Fitch, 89% of IDRs of Islamic banks in the GCC were backed by sovereigns’ ability to provide support either directly or through a parent, whilst the remaining 11% of IDRs were driven by the banks’ standalone creditworthiness, as expressed by the bank’s Viability Ratings (VRs). Most IDRs were assigned a Stable Outlook, Fitch noted, adding that the eagerness of GCC sovereigns to render a...