Fitch Ratings - London: Fitch Ratings has affirmed Abu Dhabi's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA' with a Stable Outlook.
The rating affirmation reflects Abu Dhabi's high GDP per capita and very strong fiscal and external metrics. Government debt is among the lowest of Fitch-rated sovereigns and sovereign net foreign assets are among the highest. The rating is constrained by high dependence on hydrocarbons, a relatively weak but improving economic policy framework, geopolitical risks and low governance indicators compared with peers.
The Stable Outlook reflects the resilience of oil export revenue during the Iran war, which significantly offsets the negative impact of the war, as well as abundant fiscal and external buffers.
IranWar Risks: We expect the ceasefire to broadly hold, allowing a gradual re-opening of the Strait of Hormuz. However, the course of the war is highly uncertain. There are significant risks of a renewed flare-up, which could include greater disruption to oil and gas exports due to significant damage to energy production, processing and transportation assets, as well as a prolonged closure of the Strait, both of which would weigh on Abu Dhabi's credit profile. A more lasting and structural deterioration in the regional security environment would challenge economic diversification, non-oil growth, and, potentially, the sovereign balance sheet.
Resilient Hydrocarbon Revenue: Abu Dhabi's export revenues are likely to remain close to pre-war forecasts despite the disruption, as higher prices and exports via Fujairah offset lower volumes through the Strait of Hormuz. Crude oil is the bulk of exports, and we consider Abu Dhabi's oil export infrastructure less vulnerable to long-term damage than more concentrated and bespoke downstream oil or liquefied natural gas (LNG) plants.
Rise in Government Spending: Fitch assumes higher government financial support for some of Abu Dhabi's core government-related entities (GREs), aimed at preventing a significant deterioration in their financial sustainability while they incur war-related costs, in particular in the logistics sector. This will moderately increase spending during the war, as some other expenses are put on hold. After the war ends, we anticipate that the government will introduce support programmes aimed at reviving the non-oil economy.
Modest Budget Surplus: We project the general government surplus, including our estimate of Abu Dhabi Investment Authority's (ADIA) investment income, to narrow to 3.0% of GDP in 2026 from 6.5% in 2025. Excluding ADIA's estimated investment income, we project a deficit of 2.2%, the first since 2020. Revenue will benefit from the first distribution of corporate income tax proceeds, which were collected on 2023-2024 corporate performance.
Low but Rising Government Debt: Government debt was 19.5% of GDP at end-2025, well below the peer median of 50.3%. Fitch expects this to rise to 25.3% in 2026 due to higher war-related borrowing, before stabilising post-war. Abu Dhabi plans to issue in local currency to support the domestic debt market amid high bank liquidity and is likely to refinance upcoming external debt maturities locally.
Exceptional Balance-Sheet Strength: We estimate Abu Dhabi's sovereign net foreign assets, mostly comprising ADIA assets, at 291% of GDP at end-2025 ('AA' median: 45.4%). The largest shares of the 2025 surplus were allocated to Abu Dhabi Developmental Holding Company PJSC and Mubadala, both GREs with long-term development mandates, with some also channeled to MGX, a venture focused on AI investments owned by Mubadala and G42, which is partly government-owned.
Manageable Contingent Liabilities: Abu Dhabi has larger contingent liabilities than peers due to its role as the financial backer of the UAE and its use of GREs to finance long-term projects. We estimate Abu Dhabi's GRE debt at over 50% of GDP in 2025. We view these contingent liabilities as manageable, given Abu Dhabi's ample fiscal buffers, the generally profitable nature of GREs and their large asset bases.
Abu Dhabi Banks Resilient: Abu Dhabi's banks have significant buffers against shocks. First Abu Dhabi Bank PJSC and Abu Dhabi Commercial Bank PJSC both have liquid assets/deposits ratios of over 30%. UAE banks' Viability Ratings could face risks from asset-quality deterioration under an adverse scenario in which the Iran war has severe effects, with real estate lending the most likely source of stress. Lower business volumes and higher impairments under such a scenario would reduce profitability and weaken capital buffers. Abu Dhabi's flagship banks have limited concentration in corporate real estate and would retain ample liquidity buffer in a stress scenario
Economic Contraction: We project Abu Dhabi's economy to shrink by 1% in 2026, with both oil and non-oil activity contracting. The closure of the Strait of Hormuz will be mitigated by a rise in oil production to 3.3 million barrels per day (mmbpd) post-war. We expect the non-oil economy to return to growth rapidly, although at a slower pace than pre-war, and to remain heavily dependent on GRE-funded projects.
ESG - Governance: Abu Dhabi has an ESG Relevance Score (RS) of '5[+]' for Political Stability and Rights, and the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Abu Dhabi has a high WBGI ranking at the 71st percentile, reflecting its record of domestic political stability, strong institutional capacity, effective rule of law and a low level of corruption.
