NEWS RELEASE

Jul 21, 2021 R&I Affirms AA, Stable: Emirate of Abu Dhabi

Rating and Investment Information, Inc. (R&I) has announced the following: ISSUER: Emirate of Abu Dhabi Foreign Currency Issuer Rating: AA, Affirmed Rating Outlook: Stable

RATIONALE: The Emirate of Abu Dhabi is one of the seven emirates that constitute the United Arab Emirates (UAE) and forms the core of the UAE from both economic and political perspectives. In 2021, Abu Dhabi's economy is expected to recover steadily from a sharp contraction attributable to the coronavirus pandemic and lower crude oil prices. Supported by diversifying industries and stable socio-political fundamentals, the emirate's economic fundamentals have not been undermined. Its fiscal strength is also maintained on the back of a substantial financial buffer, though the fiscal position deteriorated. Based on these considerations, R&I has affirmed the Foreign Currency Issuer Rating at AA. The government has been working to enhance the competitiveness of Abu Dhabi through diversification of industries and participation by the private sector. The proportion of gross domestic product (GDP) accounted for by oil and natural gas-related sectors is on a downward trend. In 2020, the pandemic and accompanying movement restrictions dealt a blow, causing real GDP to shrink substantially. Economic activity in non-oil sectors has been expanding since early 2021, however, reflecting the UAE's faster progress in vaccination than in other countries and easing of restrictions. While the oil sector will likely remain subdued owing to production cuts and other factors, the economy is expected to show a solid recovery. Oil and natural gas-related revenues represent a majority of the Abu Dhabi government's annual revenues, making its fiscal position highly susceptible to the prices and production trends of crude oil. The emirate's fiscal balance deteriorated due to an economic stimulus package for the pandemic and a decline in oil and natural gas-related revenues, among other factors. According to the International Monetary Fund, the UAE's fiscal balance for 2020, including the Abu Dhabi government, was a deficit of 7.4% of GDP. Benefitting in part from the government's efforts to rationalize expenditures, an economic recovery and a rise in crude oil prices, the fiscal position will likely improve in 2021. Sovereign wealth funds (SWF), which have managed fiscal surpluses, support the government to fill fiscal deficits. There is thus little concern about the government's financing. Although government debt seems to have climbed due primarily to a wider fiscal deficit, it remains small and well below SWF financial assets, in R&I's view.

The primary rating methodology applied to this rating is provided at "R&I's Analytical Approach to Sovereigns". The methodology is available at the web site listed below, together with other rating methodologies that are taken into consideration when assigning the rating. https://www.r-i.co.jp/en/rating/about/rating_method.html

R&I RATINGS: ISSUER: Emirate of Abu Dhabi Foreign Currency Issuer Rating RATING: AA, Affirmed RATING OUTLOOK: Stable

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■Contact : Sales and Marketing Division, Customer Service Dept. TEL.+81-(0)3-6273-7471 E-mail. [email protected] ■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-6273-7273 Rating and Investment Information, Inc. TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan https://www.r-i.co.jp Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are not statements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment. R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is not liable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details, please refer to https://www.r-i.co.jp/en/docs/policy/site.html. © Rating and Investment Information, Inc.