Fitch Ratings says it is unlikely that there will be a rating impact on Bahrain Mumtalakat Holding Company from the Bahrain government's plan to inject more than $1 billion into its 100 per cent subsidiary Gulf Air.

Fitch continues to expect that the capital injection and any additional material financial support to Gulf Air will be assumed directly by the government via Mumtalakat.

Fitch notes that Gulf Air's historical operating losses were a major financial burden on Mumtalakat, given the latter's material liquidity assistance thus far to the airline, of approximately $450 million in 2008 and $525 million in 2009.

Gulf Air did not indicate when and how the additional funds would be provided. Nevertheless, if Mumtalakat was to raise substantial debt on behalf of its subsidiaries or further guarantee subsidiaries' debt, it would be considered as a negative credit factor.

On June 1, Fitch assigned Mumtalakat a Long-term Issuer Default Rating of A with a stable outlook.

The viability of Mumtalakat's business model is dependent on continued strong linkages with the sovereign, its strategic importance as a holding company for the government's non oil and gas assets, and its low level of leverage relative to Bahrain's A rating.-TradeArabia News Service