Dubai: GFH Financial Group (GFH), the Bahrain based Islamic financial group, has announced that Fitch Ratings, the international credit rating agency, has affirmed GFH’s Long-term Issuer Default Rating (IDR) at “B-” with a Stable Outlook and Short-term IDR at “B”.
Fitch has primarily taken into account GFH’s success in raising capital in 2014, its improved funding and liquidity profile and the progress it has made so far in building a profitable and cash flow generative business.
Fitch noted that although GFH’s balance sheet still has high single name and sector concentration primarily in legacy real estate projects, GFH is planning to complete these real estate projects and either sell them (profitably) or retain them as an income-producing asset. However the rating agency also said that completion and eventual exit of these real estate projects might take many years.
Liquidity
In affirming the ratings, Fitch has placed considerable weightage on the fact that GFH’s liquidity, leverage and funding profile have stabilised providing flexibility to work out legacy asset exposures, although it also noted that GFH’s capacity for continued operation is vulnerable to deterioration in the overall business and economic environment. Factors constraining the rating include profitability that remains weak and volatile and is unlikely to improve materially and sustainably until significant balance sheet and business model reshaping has taken.
