GCC
Moody’s places on review for downgrade 8 government-related issuers in GCC countries

Moody’s Investors Service has placed on review for downgrade the ratings of eight government-related issuers (GRIs) based in Gulf Cooperation Council (GCC) countries. These issuers are:
- Emirates Telecommunications Grp Co PJSC
- Industries Qatar Q.S.C.
- International Petroleum Investment Company
- Mubadala Development Company
- Qatar Petroleum
- Saudi Basic Industries Corporation
- Saudi Electricity Company
- Saudi Telecom Company
Moody’s also placed on review for downgrade the ratings of Qatari Diar Finance Q.S.C. (QDF) and the ratings on the notes issued by 1MDB Energy Limited (1MDBEL).
These actions follow the placement on review for downgrade of the sovereign ratings of Saudi Arabia, Qatar, the United Arab Emirates and the emirate of Abu Dhabi on 4 March 2016.
Concurrently, the rating agency took no action on the ratings of Abu
Dhabi National Energy Company (TAQA, A3 stable), Qatar Electricity and Water Company Q.S.C. (QEWC, A1 stable) and Ooredoo Q.S.C. (A2 negative).
A complete list of affected companies and rating actions:
RATINGS RATIONALE
RATIONALE FOR PLACING THE RATINGS OF EIGHT GCC-BASED GRIs ON REVIEW FOR DOWNGRADE
Today’s actions primarily reflect the existance of credit linkages that the eight GRI’s credit profiles have to their respective economies and governments, given assumed financial support and dependence as GRIs.
The reviews will assess the credit implications, on each of the GRIs, of (1) the conclusion of the review for downgrade on the bond ratings of their respective governments; (2) the governments’ support and dependence assumptions; and (3) the impact of a weakening economic environment on their business profiles, given the potential pressure of continued low oil prices on their Baseline Credit Assessments (BCAs), where relevant.
Moody’s will also factor into its reviews planned actions that the respective governments could take to finance their budget deficits and the consequential impact for the issuers.
RATIONALE FOR PLACING THE RATINGS OF QDF AND 1MDBEL ON REVIEW FOR DOWNGRADE
Moody’s placed the ratings of QDF on review for downgrade in line with the sovereign rating of Qatar because the government, acting through the Ministry of Finance, unconditionally and irrevocably guarantees the payments in respect of the bonds that QDF issued.
The rating agency also placed the rating on 1MDBEL’s senior unsecured notes on review for downgrade as a direct result of placing the ratings of International Petroleum Investment Company (IPIC) on review for downgrade. IPIC unconditionally and irrevocably guarantees the notes issued by 1MDBEL on a joint and several basis along with 1Malaysia Development Berhad (unrated). Moody’s derives the ratings of the notes on the basis of the guarantee provided by IPIC.
RATIONALE FOR TAKING NO ACTION ON TAQA, QEWC AND OOREDOO
Moody’s decision to take no action on the ratings of TAQA, QEWC and Ooredoo reflects the rating agency’s opinion that their respective issuer ratings can accommodate up to a one-notch downgrade of their respective linked sovereign, based on their BCAs and their support and dependence assumptions.
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