Global Arab Network | UAE: Fitch Affirms Abu Dhabi-based Mubadala Development Company Stable Ratings

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UAE: Fitch Affirms Abu Dhabi-based Mubadala Development Company Stable Ratings

Global Arab Network - - John Short

Monday, 20 December 2010 15:35

UAE (Abu Dhabi) - Fitch Ratings has affirmed Mubadala Development Company PJSC's (Mubadala) Long-term Issuer Default rating (IDR) and senior unsecured rating at 'AA', respectively, Global Arab Network reports according to a press statement.

The Abu Dhabi-based diversified development and investment group's Short-term IDR has been affirmed at 'F1+'. The Outlook for the Long-term IDR is Stable. MDC-GMTN B.V.'s (MDC) global medium-term note (GMTN) programme with USD1.77bn of notes outstanding has also been affirmed at 'AA'.

The agency continues to apply its parent and subsidiary rating linkage methodology in rating Mubadala, as it believes that a strong relationship exists between the company and the Emirate of Abu Dhabi (Abu Dhabi, rated 'AA'/Stable). As such, Mubadala's rating is aligned with Abu Dhabi's sovereign rating. As at 31 December 2009, the government's cumulative capital contributions into the company since its establishment totalled AED47.7bn. Of the capital contributions of up to AED13bn approved by the government for 2010, AED2.2bn has been received by the company as at 30 June 2010.

A change in Abu Dhabi's ratings would result in a change of Mubadala's ratings.

MDC has been established as a special purpose vehicle for the sole purpose of issuing notes under the GMTN programme. The rating of the GMTN programme is in line with Mubadala's IDR and senior unsecured rating of 'AA', respectively. The notes are unconditionally and irrevocably guaranteed by Mubadala. The obligations under the guarantee will be direct, unconditional, unsubordinated and unsecured obligations of Mubadala and will rank equally with all other unsecured obligations.

Mubadala is focused on developing and managing an extensive and economically diverse portfolio of commercial initiatives. Its commercial strategy is based on long-term capital- intensive investments that deliver strong financial returns. The company manages a multi-billion dollar portfolio of local, regional, and international investments, projects and initiatives.

Mubadala's operating results for 2008 and 2009 were adversely affected by the global economic downturn, in particular by volatility in stock market valuations and in oil prices during H208 and H109. The economic downturn also adversely affected commercial real estate prices in Abu Dhabi and elsewhere in the UAE, as well as the availability and terms of financing. In the six months to 30 June 2010, the group's operating results were adversely affected by continuing volatility in global stock market prices.

Mubadala's 100% state ownership status is mandated by law and unlikely to change. It can only be dissolved after 2052, 50 years from its formation, by Emiri decree, or if its mandate is deemed complete. Established in 2002 through Emiri Decree No. 12, Mubadala is the primary business development company of Abu Dhabi. It has a mandate from the government to drive economic diversification to improve social development and build wealth for future generations. Mubadala's mission, as set forth by the government, is to achieve commercial returns while advancing the government's broader policy aims, including building Abu Dhabi's new economy, and improving the quality of life for the people of Abu Dhabi. Five members of the Abu Dhabi Executive Council sit on the company's board, the most prominent of whom is the Chairman, His Highness Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi.

Global Arab Network

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