Moody's downgrades NIG due to Kuwait share market fall

19 January 2009 16:59  [Source: ICIS news]

Picture of Kuwait CityHOUSTON (ICIS news)--Moody's Investors Service on Monday lowered the credit rating of Kuwait's National Industries Group (NIG) and warned of a possible further cut, citing the petrochemical and diversified holding company's exposure to the country's share market.

The downgrade to Baa3 from Baa2 affects $475m (€356m) of debt instruments.

Moody's said sharp declines on the Kuwait Stock Exchange had further weakened NIG's already weak market value leverage during the fourth quarter of 2008, prompting the ratings review.

An index of Kuwaiti share values has fallen by more than half since a peak in July 2008, according to data available on the exchange's website.

The Moody's review focused on steps being taken by NIG's management to bolster the weak leverage and to adopt a greater share of committed longer-term funding facilities, rather than the historical reliance on short-term maturities.

Moody's said it concluded that the decline in the value of NIG's portfolio, combined with the company's liquidity profile, suggested that its ratings were no longer commensurate with a Baa2 rating.

"Moody's has left the ratings under review for further possible downgrade as we continue to focus on the steps being taken by the company to strengthen its financial and liquidity profile, the New York-based agency said.

According to Moody's definition, obligations rated Baa are subject to moderate credit risk. They are considered medium-grade, and as such may possess certain speculative characteristics.

NIG is based in Kuwait City and has strategic and financial stakes in companies across Kuwait and the Middle East, focusing primarily on building materials, specialist engineering, petrochemicals, finance, real estate, oil and gas services and energy.

($1 = €0.75)

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By: Stephen Burns
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