Fitch affirms GIC rating with stable outlook
London, July 16, 2013
Fitch Ratings has affirmed Gulf Investment Corporation's (GIC) long-term Issuer Default Rating (IDR) at 'BBB' with a stable outlook, a report said.
Fitch has also upgraded the Viability Rating (VR) to 'bb' from 'bb-', reported the Gulf Daily News, our sister publication.
The upgrade of GIC's VR reflects an improvement in its funding profile, the agency said.
The increase in long-term debt has diversified GIC's funding and allowed it to repay shorter-term funding and better match its long-term investments.
The upgrade also takes into account the entity's improved asset quality, with impairment charges on principal investments, debt and equity securities falling by 50 per cent year-on-year, representing 16 per cent of pre-impairment operating profit in 2012, Fitch said.
GIC's IDRs and Support Rating reflect the high probability of support that the institution could receive from its shareholders if required.
The shareholders of the financial institution are, in equal parts, the six GCC states, which Fitch considers as institutional support due to their ownership stakes.
Support takes into account the ability of the shareholders (as indicated by their ratings) and their track record of recent support for GIC despite Fitch's opinion that it is of its limited strategic importance to its shareholders.
GIC's VR reflects its sound capital ratios, adequate profitability, improved funding profile and ability to generate cash in order to service its debt.
The agency considers management's increased drive for cash income as positive for the rating.
The VR also takes into account GIC's modified business strategy since it made significant losses in 2008, focusing on highly rated, liquid securities to complement its long-term investments, as well as management's track record of managing long-term investments across a range of sectors within the GCC, Fitch added. – TradeArabia News Service