By Tom Arnold
The Abu Dhabi National Energy Company (Taqa) announced on Wednesday it had terminated its relationship with Standard & Poor’s (S&P) in disagreement at the agency’s new ratings methodology for government-related entities (GRE).
The company, a flagship corporation for the Abu Dhabi government, said after an internal review it had decided S&P’s new criteria would result in a rating that would not accurately reflect the credit-worthiness of Taqa.
S&P on Monday published details of an update to its methodology and criteria for rating GREs worldwide.
Designed to achieve a more “granular analysis” of the range of GREs across sectors and regions, the agency said the changes would provide more transparency in its ratings approach.
Peter Barker-Homek, CEO, of Taqa, said the new methodology affected GREs regardless of whether their relationship with the sovereign or their economic viability remained unchanged since they were first given a rating by S&P.
“The underlying fundamentals of our business have not changed,” he said, in a statement from the firm.
“The implicit support of the government is unchanged and has consistently been confirmed in both word and deed.”
Taqa was the majority owner of plants supplying 98% of the power and water needs for Abu Dhabi, with strong ties to the government through both ownership and the membership of its board of directors, he added.
Under S&P’s previous criteria, Taqa carried a credit rating of AA-. It carries a Aa2 rating from Moody’s.
Following S&P’s methodology revision, on Tuesday it downgraded several Dubai-based GREs including port operator DP World, Jebel Ali Free Zone and Dubai Multi Commodities Centre Authority in response to concern about the emirate’s financial capability to repay their debt.
The reappraisal was the result of increased uncertainty about the government’s willingness to provide financial support to master developer Nakheel, a key GRE with sizable repayments coming due at the end of this year.
It said updated reports on each of the other affected entities would be published shortly.
Taqa has a growing asset base of US$ 23.5 billion and is one of the largest companies listed on the Abu Dhabi Securities Exchange.
Source: Arabianbusiness.com
