Moody's Investors Service has downgraded the corporate family rating (CFR) and the probability of default rating (PDR) of Aldar Properties PJSC ("Aldar") by two notches to B2 from Ba3. Concurrently, Moody's has also implemented a two-notch downgrade to B3 from B1 of the ratings for Aldar's $1.25bn (EUR0.87bn) bond (due in 2014 and issued by Atlantic Finance Limited) as well as for its Dhs3.75bn (EUR0.71bn) sukuk (due in 2013 and issued by Sukuk Funding (No. 2) Limited).
The receipt of substantial and extraordinary financial support from the government of Abu Dhabi and Mubadala -- comprised of the anticipated reimbursement and proceeds from the transfer of certain assets to the government of Abu Dhabi totaling Dhs10.9bn; the sale of residential units and land to the government of Abu Dhabi for Dhs5.5bn; and the placement of a convertible bond worth Dhs2.8bn with Mubadala -- has reduced Moody's concerns with regards to the company's ability to meet maturing debt obligations during 2011 and the first half of 2012.
Whilst this support has alleviated short-term refinancing challenges, further extraordinary government support over the medium to long-term is in Moody's view less certain following public guidance provided by the government of Abu Dhabi in January 2011 in which it reiterated its position that it views Aldar as a private company. As a result Moody's is declassifying Aldar as a government-related issuer (GRI) and is now assessing Aldar's rating on its standalone basis while also incorporating the potential for shareholder support from Mubadala which results in a one-notch uplift to the final B2 rating.
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