Kuwait's NIG issued with strong debut rating

26 March 2007 11:08  [Source: ICIS news]

SINGAPORE (ICIS news)--Moody’s Investors Service on Monday assigned first-time local and foreign currency issuer ratings of Baa2 to Kuwait’s National Industries Group (NIG) with a stable outlook.

 

“The company’s ratings are supported by its strong and diversified asset base and the good coverage this provides on existing and expected future debt, even in potentially adverse market circumstances,” said Dubai-based Philipp Lotter, a senior credit officer at Moody’s and lead analyst for NIG.

 

Although comparatively low dividend contributions from existing investment holdings currently constrain the ratings, this may improve as the group focuses on strategic and core holdings, he added.

 

NIG is one of Kuwait’s largest investment holding companies with a market capitalisation of $4.8bn (€3.6bn).

 

It has stakes in companies across Kuwait and other Gulf Cooperation Council (GCC) countries, focusing on petrochemicals, building materials, specialist engineering, finance, real estate, oil and gas services and energy sectors.

 

While just under 70% of the portfolio is based in Kuwait, Moody’s said it expected the international portion of its business to increase.

 

However, the group’s ratings were constrained by moderate cashflow, given that it receives the vast majority as dividends from minority-owned associates, the ratings service said.

 

Moody's rated NIG’s outlook as stable, noting that a growing contribution to cashflows from dividends, preferably from majority-owned or controlled entities, would benefit NIG’s credit profile and could add to upward rating pressure.

 

Finally, Moody's said NIG remained reliant on investment disposals, although it possesses a good track record of successful divestments since its privatisation in 1996. 

 

($1 = €0.75)

By: Jeanne Lim
+65 6780 4359

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