x Abu Dhabi, UAEFriday 21 July 2017

S&P lowers, withdraws Tabreed rating

National Central Cooling Company has requested that Standard & Poor's withdraw its rating after it was lowered to "CC".

ABU DHABI // Standard & Poor's (S&P) today lowered the credit ratings of the National Central Cooling Company (Tabreed) and then withdrew the ratings at the company's request. The reduction of Tabreed's ratings to "CC", one of its lowest marks, followed its announcement yesterday of a Dh1.12 billion (US$304.9 million) loss last year. Tabreed, which makes and builds cooling plants for property developments, has been stung by a slowdown in the UAE's property sector.

The company has reached out to Mubadala Development, the Abu Dhabi Government's strategic investment arm and Tabreed's largest shareholder, for Dh1.3bn in loans to help it through the downturn as it restructures its business and seeks to secure longer-term equity and debt financing. "The rating actions follow today's announcement by Tabreed of its intention to 'proactively engage with creditors to support a recapitalisation', and on 'entering into discussions with strategic investors to provide the long-term capital necessary to support the development of the business'," said Karim Nassif, a credit analyst at S&P.

"We believe that the potential recapitalisation may include a review of the terms and conditions of existing outstanding debt and, consequently, is likely to lead to some form of distressed exchange of existing obligations." S&P had downgraded Tabreed to "CCC plus" in February after earlier downgrades last August. The withdrawal of ratings comes as many companies in the region, including the Abu Dhabi National Energy Company (Taqa), have severed ties with ratings agencies after downgrades.

Tabreed's stock price declined 8.7 per cent today in trading on the Abu Dhabi Securities Exchange, after falling 9.5 per cent yesterday. @Email:afitch@thenational.ae