Dubai: Aldar Properties can continue to count on Abu Dhabi government support and will keep open its options on meeting its debt obligations, including asking for a government loan, the real-estate developer's chief financial officer said on Friday, a day after Moody's Investors Service cut the firm's credit rating.
"There has been no change in our working relationship with the government over the last two years," Shafqat Malek told Zawya Dow Jones in an interview. "It's been the same, or better."
Moody's on Thursday cut Aldar's credit rating to ‘Ba1' from ‘Baa2,' saying it assumes less government support will be forthcoming to the company. Aldar is partly owned by the government through shareholdings by wholly-government owned companies Mubadala Development Co. and Invest AD. It has 55 per cent of its shares listed on the Abu Dhabi stock exchange, according to Zawya.com.
Moody's on Thursday concluded a review of seven Abu Dhabi-based companies that it started in December last year, prompted by the restructuring of operations at Dubai government-owned conglomerate Dubai World to reevaluate assumptions of government support. All seven companies were downgraded.
Fundraising
Abu Dhabi government companies and government-related firms have borrowed heavily from international debt markets over the past year to fund their expansion and the government's aggressive development programme. Companies fully owned by the government raised at least $9 billion (Dh33.1 billion) in bonds and loans on international markets in the past year.
Thursday's downgrade on Aldar, Abu Dhabi's largest developer triggered a 1 per cent increase in the coupon to 9.75 per cent on a $1.25 billion bond Aldar has due in 2014.
The higher coupon rate, to start in November, will cost Aldar an incremental increase of Dh46 million per year, or Dh184 million over the four years until the bond matures, analysts said. "It's unfortunate, because its their change in methodology," Malek said. "We just have to wait and see until the ratings agencies change their mind, basically."
Asked if Aldar would ask the government for a loan to help meet or refinance upcoming debt, Malek said: "We have got enough liquidity at this stage. We will keep our options open."
Aldar, which has a dev-elopment portfolio worth over $70 billion, has won key projects from the government in recent years, including the Yas Marina development and a forthcoming residential housing project for UAE nationals. But Moody's said Aldar's portfolio "still contains a significant portion of commercial projects, which will require financing beyond 2011 and for which the support mechanisms are less certain."
The developer last month posted its first quarterly loss and sold Dh9.1 billion worth of infrastructure and property assets to the government from its Yas Marina development, including the Formula One racetrack.
