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Moody’s affirms Mubadala rating at ‘Aa2’ after consent solicitation announcement

Moody’s affirms Mubadala rating at ‘Aa2’ after consent solicitation announcement
Moody’s affirms Mubadala rating at ‘Aa2’ after consent solicitation announcement

Abu Dhabi – Mubasher: Moody’s Investor Service on Monday affirmed its issuer ratings for Mubadala Development Company at Aa2/P-1.

In addition, Moody’s affirmed its “P-1 Commercial Paper ratings, Aa2 backed senior unsecured ratings on notes issued by MDC - GMTN B.V., as well as (P)Aa2 backed senior unsecured Global MTN programme, which are guaranteed by Mubadala,” according to a statement.

These ratings confirmations come after a consent solicitation announcement issued by International Petroleum Investment Company (IPIC) on 1 October 2018.

In the consent solicitation announcement, IPIC request approval from its noteholders and other IPIC lenders to transfer IPIC's public and private debt liabilities amounting to $8.7 billion to Mubadala and subsequently transfer a significant portion of IPIC's assets to Mubadala.

Moody’s forecast that if IPIC lenders approve these debt transfers, the process may be finalised by the end of 2018.

The debt and asset transfer would not impact Mubadala’s ratings, Moody’s noted, explaining the Abu Dhabi-based Mubadala’s ratings along with IPIC’s ratings “already incorporate assumptions of very high levels of support from the Government of Abu Dhabi (Aa2 stable).”

The investors service further stated that it did not see any need or reason to change these assumptions, indicating that Mubadala’s ratings and outlook were aligned with those of the Abu Dhabi government.

The alignment is “because Moody's believes that Mubadala remains intrinsically linked to the Government of Abu Dhabi by virtue of being a wholly owned entity and vehicle of public policy,” it said.

According to the report, “Moody's sees the combined entity's standalone credit quality to be stronger than the individual entities.”

It cited four reasons for this belief including that the combined entity had an “enhanced scale” with AED 398.9 billion ($108.6 billion) in assets as of 30 June 2018, as well as greater sector and geographic diversification with 15 sectors in over 30 countries.

“Moderate pro forma 30 June 2018 gross debt to book capitalisation of around 32% and a more balanced portfolio of mature and growth investments” were also among the reasons.