Global Arab Network | International Petroleum Investment Company Assigned 'AA'

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

International Petroleum Investment Company Assigned 'AA'

Global Arab Network - - Adam Turner

Wednesday, 29 April 2009 15:39

International_Petroleum_Investment_Company

Standard & Poor's Rating Services announced it has assigned its 'AA' long-term and 'A-1+' short-term corporate credit ratings to the 100% state-owned International Petroleum Investment Company (IPIC), based in Abu Dhabi, in the United Arab Emirates (UAE). The outlook is stable.

The ratings on IPIC have been equalized with those on the government of Abu Dhabi. Although the Abu Dhabi government has not formally guaranteed IPIC's liabilities, the group has a high-profile policy role in undertaking international investments with some technological or other benefit for the Abu Dhabi economy or for the national oil company ADNOC, and is set to play a central role in the development of the domestic petrochemicals industry. In addition, IPIC has a second clear government mandate with respect to some strategic national projects, such as the construction of the domestic crude oil pipeline (ADCOP), or diplomatic investments (Parco, Al Falah fund).

"This, coupled with IPIC's operational and managerial proximity to the Abu Dhabi government and repeated governmental capital increases, leads Standard & Poor's to conclude that the government has the capacity and willingness to continue to provide substantial ongoing support to IPIC's operations, and extraordinary support to intervene in a timely manner if the company were to face financial difficulties," said Standard & Poor's credit analyst Farouk Soussa.

In terms of stand-alone credit profile, IPIC has a high appetite for acquisitions and sizeable debt funding. Unlike most private-sector holding companies, IPIC's investment policies are very long term and not focused on short-term liquidity or dividend coverage. A key strength of IPIC's portfolio is asset quality, with its most important investments, such as Cepsa, OMV, Borealis, and EDP, seen as having strong credit features. At the same time, exposure to the cyclical downstream sector remains a key risk factor, with refining and petrochemical companies such as Hyundai Oilbank and Nova Chemicals seen as exposed.

"The stable outlook reflects our view that IPIC will remain strategically important and operationally close to the government of Abu Dhabi, and will continue to benefit from substantial ongoing support to its operations," said Standard & Poor's credit analyst Farouk Soussa. "Any lowering in the credit rating on the government of Abu Dhabi, or any indication that the government's commitment to IPIC is weakening, would result in a lower credit rating on the company. A higher rating could result from improvement in the credit quality of the Emirate of Abu Dhabi, to which the underlying credit risk of IPIC is linked."

Global Arab Network

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network