S&P upgrades credit ratings of Aldar Properties

Dubai: Standard & Poor’s Ratings Services said on Monday it has raised its long- and short-term corporate credit ratings on Abu Dhabi-based property developer Aldar Properties PJSC to BBB-/A-3 from BB+/B on hopes of improvement in its financial risk profile over the next 12 months.

The rating upgrade reflects a positive view on the ongoing support from the Abu Dhabi government for Aldar. In the third quarter of 2014, this support has translated into material infrastructure cost reimbursements from the government, which S&P expects Aldar to collect in the next two years.

“We understand that a total of Dh6.4 billion of government receivables are still due within the next three years, as of September 30, and that Aldar intends to allocate a significant portion to debt reduction, bringing credit metrics in line with an “intermediate” financial risk profile under our general corporate methodology,” the ratings agency said in a statement.

The stable outlook reflects that Aldar’s credit metrics will remain at a level commensurate with an “intermediate” financial risk profile over the next 24 months.

“We believe the company’s growing share of recurring rental income in its total revenue base and its more cautious approach toward development activities should

translate into sustainably stable credit metrics,” the S&P added. S&P would raise the ratings if the company decreased its debt leverage.