Moody’s Investors Service upgraded Abu Dhabi’s industrial holding company Senaat's issuer rating to "A1", from "A3", citing the positive impact linked to parent company ADQ's involvement in its business.
Senaat's rating is only two notches below that of ADQ, which was rated "Aa2" – the third-highest investment grade rating given by Moody's, and at par with the Abu Dhabi government, the agency said on Wednesday.
An "A1" rating indicates a company is well-placed to meet its debt obligations. It is the fifth-highest investment grade rating at Moody's.
The rating agency also upgraded to "A1" the ratings of the senior unsecured $3 billion trust certificate issuance programme of Senaat Sukuk Limited and the senior unsecured debt issued under the programme.
The rating agency revised the outlook on all Senaat's ratings to stable from negative, due to the strong credit links between the company and ADQ.
"The upgrade of Senaat's rating ... reflects the full integration of Senaat under its parent company, Abu Dhabi Developmental Holding Company [ADQ], since the company's ownership was transferred to ADQ from the government of Abu Dhabi in March 2020," said Julien Haddad, a Moody's vice president, senior analyst and local market analyst for Senaat.
"By virtue of this integration, Senaat could be in a position to benefit from ADQ's broader and more diversified cash flows should support be required."
Senaat was transferred to ADQ's portfolio in 2020, when the state holding company rebranded and expanded its remit.
It has since consolidated some Abu Dhabi companies as it drives forward the emirate's strategy to expand and diversify its economy.
ADQ has also consolidated some of Senaat's portfolio companies, including the mergers of the National Petroleum Construction Company and the National Marine Dredging Company; food and beverage conglomerate Agthia and dates manufacturer Al Foah; as well as industrial companies Emirates Steel Industries and Arkan.
Moody's said the rating action "reflects the steps that ADQ has taken over the course of the past 12 months".
"This includes managing the day-to-day operations of the entities under Senaat and the integration of Senaat's treasury under ADQ. Moody's therefore assumes that ADQ will prudently manage Senaat's debt service and principal repayment obligations as a member of the ADQ group."
Moody's will base its rating of Senaat on the willingness of ADQ to provide timely financial support to the company, since Senaat was integrated into the Abu Dhabi holding company.
"This approach reflects Senaat's strategic importance to ADQ and the government of Abu Dhabi, which has not changed following the transfer of ownership to ADQ from the government of Abu Dhabi," Moody's said.
Senaat's ratings will be dependent on those of ADQ and could be upgraded if its parent company is confident of a boost in rating, the agency said.
