Moody's Investors Services has changed outlook on all of Gulf Investment Corporation (GIC) ratings to negative from stable reflecting the enduring pressures on its performance in light of the prevailing international market conditions.

It has downgraded the baseline credit assessment of GIC from 10 to 11 (on a scale of 1 to 21, where 1 reflects the lowest level of risk).

At the same time, Moody's downgraded to A3/Prime-1 from A2/Prime-1 the company's long- and short-term deposit ratings, and to A3 from A2 GIC's senior unsecured debt rating.

'The progressive and ongoing aggravation of the global credit crisis and the steep decline in both international and regional equity markets since July 2008 has caused GIC's position to weaken within the D+ BFSR range.

The negative rating outlook reflects that - unless markets stabilise and/or the company halts the negative trend in its performance - the downwards pressures on GIC's D+ BFSR will increase' explains Stathis Kyriakides, AVP-Analyst in Moody's Financial Institutions Group.

As previously highlighted by Moody's, GIC lacks business diversification, has a narrow customer franchise, while its performance has been reliant on the high beta part of its balance sheet.

Despite the company's efforts to diversify its portfolio of financial instruments, both in terms of geographies as well as instrument types, correlations under current extreme market stresses have converged causing a rapid deterioration in the company's performance.

Although the company has substantial hidden value in its 'Projects and Equities Participations' portfolio, Moody's notes that revenues generated by this business have always been bulky and temporally inconsistent.

Moreover, as previously identified, unlocking such hidden value is challenging in unfavourable market conditions.-TradeArabia News Service