Moody's assigns '(P)Aa3' rating to Qatar's global MTN programme

International credit rating agency Moody's on Friday assigned a foreign currency senior unsecured programme rating of '(P)Aa3' to Qatar government's global medium-term note programme.According to the transaction documents available to Moody's, the payment obligations associated with notes issued under the programme would be direct, unsecured obligations of the government and rank ‘pari-passu’ with all its other unsecured and unsubordinated obligations.Notes representing drawdowns from the programme may be denominated in various currencies and consist of different maturities.The government intends to use the net proceeds from each issuance for its budgetary and general funding purposes. The rating mirrors Qatar's long-term issuer rating of 'Aa3'.Qatar's 'Aa3' issuer rating is supported by the government's robust net creditor position, the country's exceptionally high per capita income, and its vast hydrocarbon reserves (predominantly natural gas), which provide the sovereign with significant shock absorption capacity.These strengths are balanced against credit challenges posed by Qatar's heavy economic and fiscal reliance on the hydrocarbon sector, which exposes the sovereign to fluctuations in global oil demand and prices and to longer-term carbon transition risks.Qatar's external vulnerabilities are larger than those of similarly-rated peers but its sizeable foreign-currency sovereign assets, and an established track record of mobilising them to buffer shocks, largely mitigate these risks.Qatar's credit challenges also include its relatively large, although declining, public sector debt burden and its transparency shortcomings, primarily related to the size and composition of its sovereign financial assets.Qatar's highly negative exposure to environmental risks, reflected in its 'E-4' issuer profile score, mainly relates to carbon transition due to its economic and fiscal dependence on the hydrocarbon sector, which is however partly mitigated by very low hydrocarbon production costs and a relatively cleaner mix of fossil fuels that it produces, according to Moody's.Exposure to social risks is neutral to low (S-2 issuer profile score). Despite strong population growth in recent decades, Qatar's unemployment rate is very low and the country's very small share of citizens in total population (only around 10%) and an even smaller share in the labour force will limit labour market pressures in the foreseeable future while also ensuring sustainability of the delivery of high-quality public services to the citizens, the rating agency said.Qatar's relatively strong institutions and governance strength support its positive 'G-1' issuer profile score.Moody's assessment of Qatar's institutions and governance strength reflects the track record of macroeconomic and fiscal policy effectiveness as well as improving quality of legislative and executive institutions, underpinned by incrementally stronger control of corruption and rule of law.