Shares of Aldar Properties jumped 5 per cent yesterday after Standard & Poor's (S&P) issued a positive outlook on the company.
The credit rating agency listed the company as "stable" and affirmed a "B" rating on Aldar's long-term debt.
The stock closed at Dh1.43 yesterday on the Abu Dhabi Securities Exchange General Index, its highest in three weeks but still off an October 25 high of Dh2.66.
"The affirmation reflects improvements in Aldar's liquidity and capital structure that we expect to follow asset sales to the government," S&P said in a report.
In January, Aldar announced the Abu Dhabi Government would buy Dh10.9 billion (US$2.96bn) of the company's infrastructure assets on Yas Island, Dh5.5bn of residential units and land, and a Dh2.8bn convertible bond.
At the end of last year, the company's debt stood at Dh31bn, according to S&P calculations.
"The stable outlook reflects our expectations of continued … government support for Aldar in the form of funding from local banks and government-sponsored work that should enable it to reach a stable operational and financial performance over the medium term," the S&P credit analyst Tommy Trask said in the report.
S&P's rating applies to $1.25bn of 8.75 per cent senior unsecured bonds maturing in May 2014 and Dh3.75bn of sukuk maturing in June 2013.
Chet Riley, an analyst at Nomura Securities, said yesterday investors were reacting to the improvement in Aldar's finances.
"Ultimately, Aldar will be able to access cheaper financing in the future," Mr Riley said.
But S&P warned that the company still faced challenges from the slow property and hospitality sectors in Abu Dhabi.