Fitch Ratings-London/Dubai-18 March 2014: Fitch Ratings has affirmed Abu Dhabi-based Tourism Development & Investment Company’s (TDIC) Long-Term Issuer Default Rating (IDR) and senior unsecured rating at ‘AA’, and its Short-Term IDR at ‘F1+’. The Outlook for the Long-Term IDR is Stable.
TDIC’s global medium-term note programme, TDIC Finance Limited’s outstanding notes and TDIC Sukuk Limited’s outstanding notes have also been affirmed at ‘AA’.
TDIC’s ratings are aligned with the Abu Dhabi sovereign (AA/Stable/F1+), reflecting strong ties with the sovereign.
Key Rating Drivers
State Support Key to Ratings
The ratings are primarily driven by TDIC’s strong relationship with the Emirate of Abu Dhabi, based on Fitch’s parent and subsidiary rating linkage methodology. The agency would not be able to rate TDIC on a standalone basis, due to its limited operational assets.
Consistent State Funding
The state has consistently provided TDIC with substantial direct financial support, including the provision of free land, recognised by TDIC as equity contributions. In 2013, the government provided a cash contribution of more than Dhs2bn.
Long-term State Ownership
TDIC was established in 2005 through Emiri Decree No. 12. It is fully owned by the state via the Abu Dhabi Tourism and Culture Authority (TCA Abu Dhabi), which is mandated to promote economic diversification through supporting and expanding the Abu Dhabi tourism industry. TDIC’s 100% state ownership status is mandated by law and is unlikely to change. It can only be dissolved after 2105 (100 years from its formation) by Emiri decree, or if its mandate is deemed complete.
State Development Strategy
TDIC’s mission, as set forth by the government, is to develop and manage Abu Dhabi’s tourism investment zones; it is equipped to act as master developer for large-scale tourism projects. TDIC works closely with private-sector developers, the involvement of which is a key part of the government’s broader economic strategy.
Unaffected by Public Debt Policy
TDIC, along with Abu Dhabi’s four major state-owned enterprises (SOEs), including a further two rated by Fitch – Mubadala Development Company PJSC, and International Petroleum Investment Company PJSC are unaffected by the emirate’s recently approved public debt policy.
Fitch continues to apply its parent and subsidiary rating linkage methodology in rating these entities, as we believe that implicit state support from the Emirate of Abu Dhabi has not changed from that previously announced. Fitch does not rate the fourth of the emirate’s largest SOEs – Abu Dhabi National Energy Company PJSC. For more details, see ‘Major SOE Ratings Still Benefit from Abu Dhabi Support’, dated 24 October 2012, on www.fitchratings.com.
A change to the sovereign ratings of Abu Dhabi would probably lead to a similar change in TDIC’s ratings. Changes to implied support and commitment from/ownership by the government of Abu Dhabi would prompt a review of the ratings. A significant change in TDIC’s operational structure, and any potential divestment of key operating assets, would also prompt a review of the ratings.
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Bashar Al Natoor
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