UAE – Mubasher: Moody's Investors Service on Monday assigned Emirates Strategic Investments Company’s (ESIC) proposed $1 billion Trust Certificate Issuance Programme to be established by its subsidiary ESIC Sukuk Limited a (P)Baa3 senior unsecured rating, with a stable outlook.

The stable outlook shows that ESIC's credit metrics are expected to remain around current levels, backed by growing recurring revenue and cash flow generation despite the unhealthy real estate environment in the UAE, according to a press release.

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

Lahlou Meksaoui, a Moody's local market analyst, said: "The transaction is credit positive because the proceeds of the issue of the future certificates will be used to acquire investment properties and grow ESIC's listed equity portfolio and it is in line with our expectation for the issuer rating".

Earlier this month, Moody's Investors Service announced it had assigned the first-time long-term issuer rating to ESIC at Baa3, with a stable outlook.

The Baa3 issuer rating shows ESIC’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.