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Moody's assigns Baa3 rating to Emirates Strategic Investments

Moody's assigns Baa3 rating to Emirates Strategic Investments
The Baa3 issuer rating shows the company’s high occupancy rates of its recurring income property portfolio

UAE – Mubasher: Moody's Investors Service announced it has assigned the first-time long-term issuer rating to Emirates Strategic Investments Company (ESIC), an Abu Dhabi-based private company, at Baa3, with a stable outlook.

“ESIC's Baa3 rating is supported by its strong financial profile and a good base of recurring income from investment properties and equity investments. This partially offsets the company's asset and geographic concentration as well as the weak property market outlook in the UAE,” Lahlou Meksaoui, a Moody's Lead Analyst, said.

The Baa3 issuer rating shows the company’s high occupancy rates of its recurring income property portfolio comprising residential properties in Abu Dhabi and its small size and geographical concentration in the UAE rated at Aa2 with a stable outlook.

The rating also reflects ESIC’s good liquidity and low leverage, as well as its rental portfolio in the country's residential sector expected to slow down over the coming 12 to 18 months, Moody’s said.

The credit rating agency said that the stable outlook indicates that credit metrics of ESIC would remain unchanged at current levels on the back of growing recurring revenue and cash flow generation despite the unhealthy real estate environment in the UAE.

The stable outlook also shows that the company would issue a senior unsecured sukuk to use its proceeds to enhance diversification and demonstrate access to capital.

Moody’s expected ESIC's rating to be downgraded if the UAE real estate market maintained the week performance and the company liquidity or credit metrics weakened.