Moody's concludes review of Abu Dhabi / UAE government-related issuers (GRIs)

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All seven companies saw their ratings downgraded, some by several notches. Ratings affected by today's announcement include the following:

- Mubadala Development CompanyMubadala Development Company (MubadalaMubadala): Aa3 / Prime-1, stable outlook, from Aa2 / Prime-1

- International Petroleum Investment CompanyInternational Petroleum Investment Company (IPICIPIC): Aa3 / Prime-1, stable outlook, from Aa2 / Prime-1

Tourism Development & Investment Company (TDIC)Tourism Development & Investment Company (TDIC)

- Abu Dhabi National Energy CompanyAbu Dhabi National Energy Company (TAQATAQA) to A3 / Prime-2, stable outlook, from Aa2 / Prime-1

Emirates Telecommunications CompanyEmirates Telecommunications Company

EtisalatEtisalat

- Dolphin EnergyDolphin Energy (DolphinDolphin) to A1, stable outlook, from Aa3

- Aldar Properties (Aldar)Aldar Properties (Aldar) to Ba1, negative outlook, from Baa2

For a more detailed analysis of the individual companies affected by today's rating action, please refer to their respective Credit Opinions which will be published shortly on moodys.com.

MubadalaMubadala

IPICIPIC

TDICTDIC

IPICIPIC

Furthermore, the government has formally assured Moody's that it fully and unconditionally stands behind these entities for any debt both principal repayments and debt servicing on a timely basis in the event that the company were unable to provide for itself, a policy that is also expected to remain in place for the foreseeable future.

Whilst this commitment is substantial and will continue to result in Moody's considering it appropriate to reflect this support in meaningful uplifts to the ratings of all three entities, Moody's has decided to introduce a moderate distinction between their ratings and that of the sovereign given that no explicit formal agreement exists obligating the government to support them under all circumstances. This has therefore resulted in the one notch downgrade in the ratings of MubadalaMubadala and IPICIPIC to Aa3 and a two notch downgrade in the ratings of TDICTDIC to A1. The distinction in the rating of TDICTDIC relative to MubadalaMubadala and IPICIPIC reflects TDICTDIC's weaker fundamental creditworthiness given its high exposure to large-scale real estate projects that are in earlier stages of development, albeit of very high strategic value. Going forward, the ratings of all three companies are expected to continue to move within one (MubadalaMubadala, IPICIPIC) and two (TDICTDIC) notches of the sovereign.

Whilst the Abu Dhabi government also expressed strong statements of support to TAQATAQA, DolphinDolphin and AldarAldar, Moody's has decided to introduce a greater level of distinction between the ratings of these companies and those of the government, thus resulting in downgrades.

TAQATAQA, whose baseline credit assessment (BCA) -- the measure of its fundamental creditworthiness excluding any exceptional support from the government -- was unchanged at Ba1, continues to enjoy high support according to Moody's methodology. However, due to the lack of ongoing and regular funding from the government and a greater commercial orientation of its business activities -- including now substantial foreign engagement -- the government support factored into its rating was lowered from the previously highest level. Accordingly ratings have been lowered to A3. Whilst exceptional and timely support remains high, we believe it cannot be regarded as absolute. Moody's believes, and indeed ratings assume, that TAQATAQA's fundamental creditworthiness will strengthen over the medium term, as the company focuses on de-leveraging its balance sheet and consolidating its business profile rather than engaging in further large-scale acquisitions. Moody's has also withdrawn its provisional Aa2 ratings on three proposed guaranteed bonds at TAQATAQA North. These bonds were never issued.

The assumed support of DolphinDolphin, whose BCA was unchanged at Baa1, was also lowered marginally to reflect the company's commercial -- albeit highly strategic -- business activities. Dolphin'sDolphin's rating is now A1. Both DolphinDolphin, which sources and transports gas from Qatar by pipeline to the UAE, and TAQATAQA, which majority owns the bulk of Abu Dhabi's power and water production assets, are viewed as very strategic.

The downgrade of AldarAldar's ratings to Ba1 also reflects a lowering of the support which Moody's assumes will be forthcoming to the company over time. Although various government entities have assigned large public infrastructure projects to AldarAldar in the past, with a significant step-up in 2009, AldarAldar's portfolio still contains a significant portion of commercial projects, which will require financing beyond 2011 and or which the support mechanisms are less certain. This uncertainty, as well as the exposure to the volatile real estate market, have been expressed in the negative outlook, which relates to the company's stand-alone fundamental profile. This is unchanged at B2.

The support factored into EtisalatEtisalat's ratings from the federal government was adjusted from high to medium, thus bringing it in line with other regional and international telecommunications companies. This has resulted in its ratings being lowered to Aa3. The company's stand-alone profile, which remains unchanged at A2, continues to reflect its fairly benign regulatory and competitive environment, and its solid financial profile, although we expect some of its financial flexibility to be used for acquisitions abroad in line with its growth strategy.

Moody's takes strong comfort from the Abu Dhabi government's recent initiatives to establish greater control and oversight of its GRIs. The recent establishment of a Debt Management Office (DMO) as part of the Department of Finance represents the institutional cornerstone of this initiative, thus requiring all GRIs to obtain approval for debt financing from the DMO prior to issuance. It will also allow the government to introduce greater day-to-day oversight over a GRIs financial condition, including forthcoming liquidity requirements, as well as allowing it to intervene in a timely manner, where required. Accordingly, Moody's believes that most rated GRIs are likely to see greater equity contributions from the government, particularly those whose financial profiles are currently characterised by high leverage.

All ratings are now stable with the exception of AldarAldar, whose negative outlook incorporates ongoing medium term risks affecting its stand-alone profile inherent with the real estate sector. Accordingly, Moody's expects the government framework that governs the entities and particularly regarding those that are rated closest to the sovereign to remain unchanged for the foreseeable future. Moody's also expects the government to continue to strengthen its oversight over its GRIs via the newly established DMO, and to ensure that the balance sheets of those entities that are currently stretched are rectified over time. This is particularly the case for TAQATAQA, where we are assuming a gradual de-leveraging over the medium term. Ratings also assume that entities rated closest to sovereign level maintain timely access to government liquidity, which is particularly relevant for IPICIPIC, which faces substantial debt refinancing requirements over the short term.

Today's rating action completes Moody's review of all seven companies, which were placed on review for downgrade on 9th December 2009. AldarAldar's last rating action was on 28th January 2010, when Moody's lowered its ratings given a deterioration of its BCA.

The principal methodology used in rating all entities affected by today's rating action was "The Application of Joint Default Analysis to Government Related Issuers", published in April 2005, which determines ratings on the basis of a company's baseline credit assessment, as well as credit enhancement for exceptional government support. Accordingly, ratings were assigned by evaluating factors we believe are relevant to the baseline credit assessment of the issuers, such as i) the business risk and competitive position of the companies versus others within its industry, ii) the capital structure and financial risk of the companies, iii) the projected performance of the companies over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of the companies' core industries and ratings are believed to be comparable to those of other issuers of similar credit risk. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

-Ends-

DIFC
Philipp L. Lotter
Senior Vice President
Corporate Finance
Moody's Middle East Ltd.
Telephone: +971-44-01-9536

London
David G. Staples
Managing Director
Corporate Finance
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

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