US-based Moody’s Investors Service (Moody’s) assigned its third-highest investment grade rating to Abu Dhabi’s state holding company, ADQ, the same level given to the Abu Dhabi government.
ADQ, which ranks as the Emirate’s third-largest fund after Abu Dhabi Investment Authority and Mubadala, was rated Aa2 with a stable outlook by Moody’s.
Mr. Julien Haddad, Senior Analyst at Moody’s remarked that “the Aa2 issuer rating and stable outlook are aligned with those of the government of Abu Dhabi because we believe ADQ is intrinsically linked to the government of Abu Dhabi by virtue of being a wholly-owned entity and a vehicle of public policy.”
The ADQ owns a broad portfolio of businesses, including the companies that operate Abu Dhabi Ports, Abu Dhabi Airport, the Abu Dhabi Securities Exchange, and major industrial assets like Emirates Steel.
ADQ holds direct and indirect stakes in more than 90 firms throughout the world and nationally. Over the last 18 months, a number of these have either entered into or are on the way to proposed mergers to assist build national champions in many cases bringing larger combined entities onto public markets.
These have included the combination of Abu Dhabi National Energy Company, Taqa, with Abu Dhabi National Power Corporation, National Marine Dredging Company’s tie-up with National Petroleum Contracting Company, Agthia’s acquisition of dates company Al Foah and recently announced plans to merge Emirates Steel with Arkan Building Materials and Abu Dhabi National Hotels with Abu Dhabi National Exhibition Centre.
According to the rating agency, ADQ “consolidates some of Abu Dhabi’s national champions” and is one of the major public vehicles to carry out the government’s objective of reducing the local economy’s dependency on oil revenues while also creating jobs for UAE citizens.
Its credit quality benefits from its large scale, strong liquidity, and “investments in assets with a market-leading position” in the Emirate. Liquidity at the holding company level is bolstered by dividends received from ADQ’s operating subsidiaries and investments, with Taqa being the main dividend contributor to the group in 2020,” Moody’s said.
The rating agency stated that ADQ’s stable outlook is linked with that of the Abu Dhabi government, given the “strong credit links between the two.”