In order to incorporate all . Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. References herein to Moodys include Moodys Corporation. Furthermore, Moody's estimates that Saudi Arabia's government financial assets, excluding equity stakes in state-owned enterprises, were equivalent to more than 30% of GDP at the end of 2021. Jim Hempstead is a Managing Director in Moodys Global Project & Infrastructure Finance Group, where he heads both the North American Regulated Utility & Power Team and the North American Public Infrastructure Team. Moody's is using an asymmetric 5-point Credit Impact Score (CIS) scale to assess the risk, with 1 indicating a positive impact of ESG issues, and 2 being neutral. Interested in learning more about getting rated? Extraordinary competitiveness in energy allows the accumulation of wealth, which in turn enhances the economy's capacity to absorb shocks. AND/OR ITS AFFILIATES. The CIS is developed. This risk exposure is highest in the US, but increasing in other regions too. Trust and Banking Company, Citicorp North America, and Irving Trust Company. Moody's Investors Service provides investors with credit ratings, risk analysis, and research for stocks, bonds, and government entities. Mounting pressure on packaging companies to increase their use of post-consumer recycled content (PCR) in the US has the potential to weigh on sector margins because PCR is more expensive than virgin resin. 0800-666-3506. James holds aMastersdegree in Environmental Technology from ImperialCollege, Universityof London. ESG factors are taken into consideration for all credit ratings. Gender diversity on boards linked to credit quality, especially in North America, Europe. Moody's Analytics develops software and tools to help. Saudi Arabia's strong non-hydrocarbon sector growth is underpinned by a strong contribution from private investment and accompanied by strong growth in Saudi citizens' employment, which reduced the Saudi citizens' unemployment rate below 10% during 2022 for the first time in at least 15 years. This publication does not announce a credit rating action. MOODYS CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODYS CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. Transparency Assessments, which are symbols and scores that are not credit ratings. All rights reserved. Moody's (NYSE: MCO) is a global integrated risk assessment firm that empowers organizations to make better decisions. Saudi Arabia's ESG Credit Impact Score is moderately negative (CIS-3), reflecting highly negative exposure to environmental risks and moderately high social risks, which are partly contained by institutions and governance strength and economic resilience, including the availability of financial resources in the form of sovereign wealth fund . Moody's integrates ESG considerations into the credit analysis of the companies, including each entity's risk exposure and the degree of credit impact. The issuer's institutions and governance strength, have materially increased. 96 Boulevard HaussmannParis, 75008 Macroeconomic challenges will exacerbate ESG credit risks in 2023. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. The key areas where significant progress has been made (and continues to be made) include social reforms, judicial system reforms, education system reforms, as well as comprehensive regulatory and economic reforms, all of which will function as enablers for more robust private sector investment and growth in the non-hydrocarbon sector. 2023 Moody's Investors Service, Inc., Moodys Analytics, Inc. and/or their affiliates and licensors. In turn, if effective, this will enhance the sovereign's resilience to oil price cycles and grow the government's potential non-hydrocarbon revenue base for when oil revenues becomes less robust due to the effects of accelerating global carbon transition on hydrocarbon demand and prices. Saudi Arabia's strong institutions and governance strength support its positive G-1 issuer profile score. Jim helped manage the firms global Environmental, Social and Governance efforts between 2017 2020. Prior to joining Merrill Lynch, Jim worked with Salomon Smith Barney Corporate Finance, working in their Global Energy &Power Group. It has leading positions in the provision of credit ratings and research covering debt instruments and securities, credit and economic analysis, and financial risk management. Issuers with healthy overall financial positions and strong liquidity are best positioned to service these risks with minimal credit impacts. Moodys credit analysis seeks to incorporate all issues that can materially impact credit quality, including ESG and climate risk; and aims to take the most forward-looking perspective that visibility into these risks and mitigants permits. We also provide Carbon Transition Assessment (CTA) which provides a consistent and verifiable means to analyze carbon transition risk for rated non-financial companies. Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235. No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moodys credit rating is given or made by Moodys in any form whatsoever. https://www.moodys.com/search?keyword=Series%3A%20MIS%20ESG%20Scores%20, https://www.moodys.com/research/Cross-Sector-Global-MIS-ESG-credit-impact-scores-and-issuer--PBC_1286636, http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1318197. We calculated the average increase in credit scores over the last three years for a consumer in each of 10 credit score bands in December 2022. 2023 Moodys Corporation, Moodys Investors Service, Inc., Moodys Analytics, Inc. and/or their licensors and affiliates (collectively, MOODYS). She is responsible for a portfolio of US-based regulated electric and gas utilities. Labor-market scars in APAC economies with big informal sectors to drive social, growth, fiscal risks. Stabilizing macroeconomic conditions in Asia-Pacific countries, coupled with a policy and regulatory focus on green and transition finance, will bolster ESG-labeled bond volumes in 2023. To the extent permitted by law, Moodys and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moodys or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information. Ilango cites the case of California's Pacific Gas and Electric Company (PG&E), which faced billions of U.S. dollars in liabilities related to wildfires, a physical risk, between 2015 and 2018. Improving policy effectiveness is reflected by the government's implementation of structural and fiscal reforms since 2017 and initial progress in advancing its comprehensive economic diversification agenda. Select any of the sessions below to gain access. Use semicolon to separate each address, limit to 20 addresses. Societal trends and demographic shifts heighten enrollment volatility for US colleges. Social tensions also threaten to raise political risks or spur government spending. Moody's also commented on the political process, warning that the heightened polarization on both sides increased the risk of a default. MOODYS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. Client Service: 44 20 7772 5454, Dial the AT&T Direct Dial Access code for, We brought you to this page based on your search query. Paris, March 17, 2023 -- Moody's Investors Service (Moody's) has today changed the outlook on the Government of Saudi Arabia to positive from stable and affirmed its long-term issuer and senior unsecured ratings at A1. You have reached the daily limit of Research email sharings. James was lead author of a series of research which sparked investor interest in the concept of stranded. Recipient email addresses will not be used in mailing lists or redistributed. The agency cut the bank's long-term issuer rating and local currency subordinate ratings to B2 from Baa1 and long-term local currency bank deposit rating to Baa3 from A1 . Moody's integrates ESG considerations into the credit analysis of the companies, including each entity's risk exposure and the degree of credit impact. She covers a portfolio of regulated electric and gas utilities, interstate natural gas pipelines, and power generating companies including waste-to-energy and nuclear. Please submit the following details to download the report, Please enter the email address associated with your. Recipient email addresses will not be used in mailing lists or redistributed. Saudi Arabia is also one of the world's most arid states and rapid economic and population growth in recent decades have increased challenges surrounding water sustainability. Prior to joining Moodys in August 2017, Nana was a Vice President in the Power &Utilities investment banking group at J.P. Morgan where she provided financial and advisory services to electric and natural gas distribution companies. In this cross-sector rating methodology, we explain our general principles for assessing environmental (E), social (S) and governance (G) risks, collectively ESG, in our credit analysis for all sectors globally. 2023 Moody's Investors Service, Inc., Moodys Analytics, Inc. and/or their affiliates and licensors. Thank you for your interest in sharing Moody's Research. Sustainable Finance and Second Party Opinions, Sustainable bond issuance poised to rebound 10% in 2023 to about $950 billion, short of record high. Perus social unrest has mixed credit implications for companies, but severity will depend on duration. The issuer's susceptibility to event risks has not materially changed. James was previously Research Director at Carbon Tracker- a boutique research house - where he led a team producing thematic energy research combiningelements ofclimate change scenarios with financial analysis. Moodys is rolling out ESG Issuer Profile Scores and Credit Impact Scores across our $80 trillion issuer portfolio. France Graham started his career in the investment banking division of Credit Suisse in New York. As global issuance of green, social, sustainability and sustainability-linked bonds swings back to growth this year, macroeconomic and market uncertainties and greater scrutiny over perceived greenwashing will temper the pace of recovery. Economic and fiscal reliance on the hydrocarbon sector will remain the key credit challenge for Saudi Arabia. Moody's - New scores depict varied, often credit-negative impact of ESG factors for sovereigns 18 January 2021 London, January 18, 2021 -- Moody's new ESG issuer profile and credit impact scores provide greater clarity, consistency and differentiation on risk exposure, degree of credit impact Nana Hamilton is a Vice President Senior Analyst in Moodys Global Project &Infrastructure Finance Group. You acknowledge and agree that Moodys credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities. +852-3758-1350, Sydney +61-2-9270-8141, Mexico City Prior to joining Merrill Lynch, Jim worked with Salomon Smith Barney Corporate Finance, working in their Global Energy & Power Group. On June 6th, Moody's published a Request for Comment (RFC) for an Appendix to its ESG methodology, covering structured finance transactions, including covered bonds. 8 In recent years, large companies have been more willing to embrace debt as part of an effort to increase perceived value by shareholders. today published environmental, social and governance (ESG) Issuer Profile and Credit Impact Scores for international regional and local governments (RLGs). NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. in International Business from The College of New Jersey and an M.B.A. in Corporate Finance from New York Universitys Stern School of Business. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. By clicking I AGREE, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moodys information that becomes accessible to you (the Information). climate change scenarios with financial analysis. Jairo Chung is a Vice President Senior Credit Officer in Moodys Global Infrastructure Finance Group, joining the Utilities team in August 2013. [11] 7 In Q4 2021, only two U.S. companies had AAA ratings. Ms. Chung holds a B.S. PG&E Corp.'s ESG Credit Impact Score is "very highly negative," according to Moody's. The ratings agency said the company's ESG attributes hurt the company's credit rating. degree in Environmental Technology from Imperial. Exposure to social risks is moderately negative (S-3 issuer profile score). Ltd. led to a number of investor initiatives on carbon asset risk. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com. A significant escalation of regional geopolitical risks that would threaten Saudi Arabia's oil production and export capacity would also exert downward pressure on the rating. James Leaton is a SVP - Environment, Social & Governance. Dial the AT&T Direct Dial Access code for, Moodys insights on the credit impact of ESG factors and latest analysis of sustainable debt instruments, ESG Scores: Credit Impact Scores and Issuer Profile Scores Explained. Moody's CreditView is our flagship solution for global capital markets that incorporates credit ratings, research and data from Moody's Investors Service plus research, data and content from Moody's Analytics. SECTOR COMMENT The Fed exercise is focused on the change in probability of default, loss given default and, where applicable, internal risk ratings, rather than aggregated loss estimates, as are typically the outcome of stress-testing exercises. Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Methodology for integrating ESG into credit analysis. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. ESG credit scores by Fitch Ratings, S&P Global Ratings and Moody's Investors provide a description of how the ESG factors have relevance to or impact on the final credit rating, according to the . Subsequently, S&P and Moody's downgraded PG&E's rating due to its challenging environment, and the company finally filed for bankruptcy on 29 . She began her career at Public Service Enterprise Group, a utility holding company located in New Jersey. Credit Impact Scores communicate the impact ESG considerations have on an entity's credit rating. See ourPrivacy Policyfor full details. covering companies in the energy and municipal finance sectors. By providing your information, you will also receive emails from Moodys Corporation and itsaffiliatesregarding our business, products and services. The credit impact of these risks is most pronounced among corporate, sovereign and sub-sovereign issuers. If this isn't what you are looking for, you can. By providing your information, you will also receive emails from Moodys Corporation and itsaffiliatesregarding our business, products and services. Prior to joining Moodys in 2015, Graham was City Advisor to Ofwat, the English and Welsh water regulator, through the 2014 Price Review. However, value-added growth in the private non-hydrocarbon sector, which averaged more than 6% during 2021-22, indicates that diversification is gaining traction, in particular when contrasted with economic slowdown during 2022 in most other G-20 economies. Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. *Registration will close 24 hours prior to the event, Navigating the five-point ESG scale and an overview of current fundamental industry business conditions. Increasingly, Moody's also expects that a growing portion of funding for the giga projects will come from private investors, which will ensure long-term commercial viability of the projects and limit pressure on the government balance sheet, including in the form of contingent liabilities. Heat maps provide relative ranking of various sectors along the E and S classification of risks. 96 Boulevard Haussmann James was lead author of a series of research which sparked investor interest in the concept of strandedassets, andled to a number of investor initiatives on carbon asset risk. 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