Business | Banking
Mubadala tries to secure credit rating
Mubadala Development Co said it is seeking its first credit rating in a bid to lower borrowing costs.
- Reuters
- Published: 00:12 May 6, 2008
Abu Dhabi: Mubadala Development Co said it is seeking its first credit rating in a bid to lower borrowing costs.
"We are using great advisers and will be rated by multiple agencies," chief operating officer Waleed Al Muhairi said yesterday. "It is about increased transparency and it is about decreasing the cost of debt."
Mubadala should secure the ratings by the end of the year, Al Muhairi said.
Investments by sovereign wealth funds have raised concerns about their potential political motives among Western countries, some of which are considering restrictions on their activities.
Last week, the International Monetary Fund and 25 sovereign wealth funds established an international working group to draft the first best practice guidelines for the state-owned funds.
The guidelines in governance and transparency are aimed at helping ease worries about the funds' growing size and influence, since many reveal little about their investments.
Asked on Monday whether Mubadala, which manages over $10 billion in assets, plans to tap markets for financing, Al Muhairi said: "We have different sources of capital and the government is not the only source and we will be looking at different options ... it is just a refining of our strategy."
Mubadala has diversified stakes in energy, aerospace, telecommunication, automotives, healthcare, real estate and shipbuilding.
In the last two years, it has bought stakes in US-based Advanced Micro Devices, the world's second-largest computer processor maker, and Swiss aircraft maintenance firm SR Technics. Last September, it bought a 7.5 per cent stake in the Carlyle Group for $1.35 billion.
Holdings
Half of Mubadala's holdings are in the Middle East, and the rest elsewhere, Al Muhairi has said in the past. It has controlling stakes in about 60 per cent of companies it invests in, while 40 per cent are minor stakes.
Sovereign wealth funds, many based in oil producing countries as well as Asian exporters such as China, control between $2 to $3 trillion in assets. The funds are concerned about protectionist restrictions on their investments, which could hamper the international flow of capital.
They have also shown to be market stabilisers, investing billions in banks such as Citigroup, whose balance sheets were hit by the financial market turmoil.
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