S&P 'A' rating for TAQA programme

Long term debt rating assigned to $9bn MTN programme

Long term debt rating assigned to $9bn MTN programme.
Long term debt rating assigned to $9bn MTN programme.

Standard & Poor's Ratings Services said today it assigned an 'A-' long-term debt rating to Abu Dhabi National Energy Company PJSC's (TAQA) proposed $9 billion medium-term note (MTN) program.
The program ranks pari passu with all of TAQA's other outstanding senior unsecured debt, according to the program's terms. We will review the final terms and conditions on execution and signing of the transaction documentation.
The program should allow TAQA to raise funds to pay down existing debt and for other general corporate purposes. For example, we understand TAQA is looking to refinance its bond maturity of about UAE dirham (AED) 5 billion ($1.5 billion) due in October 2012, taking advantage of the current low interest rate environment. The current rating on TAQA factors in a small benchmark issuance under the program in the last quarter of 2011.
We rate the proposed MTN program one notch below our corporate credit rating on TAQA, reflecting our view of the program's likely structural subordination to senior secured debt held by lenders to TAQA's power and water project-financed assets, who are likely to benefit from better recovery prospects.
We notch down the rating on a debt issue if the issuer is investment grade, and when more senior claims total more than 20% of its assets. On a consolidated basis, we calculated the ratio of TAQA's secured debt to assets at about 40% on Dec. 31, 2010.
We consider, on a proportional consolidated basis, the same ratio stood at about 30%, according to TAQA's financial statements for 2010.


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