Global Arab Network | Withdrawn at Company's Request - Kuwait-based Gulf Investment Corporation Ratings Affirmed

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Withdrawn at Company's Request - Kuwait-based Gulf Investment Corporation Ratings Affirmed

Global Arab Network - - Mohammed Almasri

Tuesday, 15 February 2011 12:30

Kuwait-based_gulf_investment_corporation

Kuwait - Standard & Poor's Ratings Services said today that it has affirmed its 'BB-/B' long- and short-term counterparty credit ratings on Kuwait-based investment holding company Gulf Investment Corporation G.S.C. (GIC). Subsequently, the ratings were withdrawn at the company request. The outlook was stable at the time of withdrawal, Global Arab Network reports according to a press statement.

"The ratings affirmation reflects our conclusion that the assumptions factored into the ratings still hold," said Standard & Poor's credit analyst Emmanuel Volland.

S&P anticipates that GIC's business and financial profile will not change materially in the foreseeable future. At the same time, S&P expects the links between GIC and its shareholders to remain unchanged. While S&P does not foresee a material improvement in the company's funding structure, which S&P expects to remain skewed toward short-dated sources, S&P acknowledges GIC's improving financial performance.

GIC's gearing is high from its point of view. The loan-to-value ratio (LTV, calculated as net debt to its estimate of the value of the investment portfolio) for GIC stood at about 60% on Sept. 30, 2010. S&P assesses this level as high compared with peers' and only partially mitigated by the adequate quality and diversification of the investment portfolio. At the same time, S&P acknowledges that the company has materially deleveraged its balance sheet over the past two years.

The long-term rating on GIC includes one notch of uplift from its stand-alone credit profile (SACP), reflecting its classification of GIC as a government-related entity (GRE) under its methodology.

The uplift is based on S&P views of GIC's "strong" links with its shareholders and "limited" strategic importance, which imply a "moderate" likelihood of timely and sufficient support if the need rises. GIC is equally owned by the six Gulf Cooperation Council (GCC) countries.

S&P also notes the strong ongoing funding support from entities related to the company's shareholders through the provision of short-term deposits on a commercial basis. While this exacerbates the large maturity mismatch, S&P base-case scenario for GIC's deposit base assumes a high level of rollover of these deposits given the direct or indirect interest of some of the depositors in GIC's equity.

Global Arab Network

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