x Abu Dhabi, UAESunday 21 January 2018

Mubadala euro bonds given top credit rating

The strategic investment arm of the Abu Dhabi Government receives top marks from credit ratings agencies on a new short-term borrowing programme.

Mubadala Development, the strategic investment arm of the Abu Dhabi Government, yesterday received top marks from credit ratings agencies on a new short-term borrowing programme. Moody's Investors Service, which last year put the ratings of Mubadala and other Abu Dhabi firms on watch for a possible downgrade because of uncertainty about government support, gave the programme a "Prime-1" rating, its highest for short-term borrowers.

Fitch Ratings and Standard & Poor's also gave it their highest ratings: "F1 plus" and "A1 plus", respectively. Ratings agencies have changed their assumptions about government support for state-owned companies across the region in recent months, leading to a bout of downgrades. The changes followed the announcement last November that Dubai World, a large Dubai Government-owned conglomerate, would seek to restructure US$26 billion (Dh95.49bn) of debt.

Those changes, however, do not seem to have affected ratings on Mubadala's new facility, called a Eurocommercial Paper programme. The facility will function like an international credit card for the company, allowing it to borrow money for short periods in currencies other than the dirham. Under the programme, for example, Mubadala could borrow dollars from international banks and corporations for up to a year.

Fitch Ratings said in an e-mailed statement that it assumed the full support of the Abu Dhabi Government, "given the strong relationship between the company and the emirate of Abu Dhabi. As such, Mubadala's ratings are aligned with Abu Dhabi's sovereign ratings ['AA', one of the agency's highest]." A source close to Mubadala said the programme was meant to diversify Mubadala's sources of financing for its operations and projects.