Fitch Ratings has affirmed Bahrain Mumtalakat Holding Company's (Mumtalakat) Long-Term Issuer Default Rating (IDR) and senior unsecured rating at BBB.

Fitch also affirmed Mumtalakat's Short-Term IDR at F3, while the outlook on the Long-Term IDR is Stable.

Mumtalakat's $750 million five per cent notes, due on June 30, 2015, have also been affirmed at BBB.

The agency continues to apply its parent and subsidiary rating linkage methodology in rating Mumtalakat as it believes that a strong relationship exists between the company and Bahrain.

"Mumtalakat is 100 per cent owned by Bahrain's government and is the government investment arm," said Fitch EMEA Corporates director Bashar Al Natoori.

"It was established as an independent holding company for the government's non-oil and gas assets as an active investor in diverse business and industry sectors in over 35 commercial enterprises, nationally and internationally.

"However, ratings that factor in implicit state support will always be subject to the very real event risk of changes in political approach by the sovereign," he added.

Bahrain is in the process of diversifying its economy away from the hydrocarbon sector towards the production of high value-added goods and services and Mumtalakat was established by the government to help drive this transformation.

In addition, Mumtalakat's board of directors is formed exclusively of prominent government officials and businessmen, all of whom represent the interests of the shareholder, which is the government.

Mumtalakat has been receiving government equity shares in state-owned enterprises, funds and free land, to manage and operate its subsidiaries.

Although government support falls short of an explicit debt guarantee, Fitch considers that Mumtalakat's high profile and strategic role mean that support would be provided if required.

The viability of Mumtalakat's business model is dependent on continued strong linkages with the sovereign and its strategic importance in being the holding company for the government's non-oil and gas assets and, at the same time, not being highly leveraged relative to Bahrain's Long-term BBB rating.

Mumtalakat considers itself a long-term investor to continuously focus on portfolio diversification, while keeping a controlling share in key strategic entities. Its aim is for all companies to self-finance their operations rather than receive funding directly from the government or Mumtalakat. – TradeArabia News Service