Fitch Ratings-London-28 November 2012

Fitch Ratings has assigned IPIC GMTN Limited's USD750m notes maturing 2015, EUR800m notes maturing 2018 and EUR850m notes maturing 2023 final senior unsecured ratings of 'AA'. The notes are irrevocably and unconditionally guaranteed by the International Petroleum Investment Company (IPIC) PJSC, which is wholly owned by the Government of the Emirate of Abu Dhabi ('AA'/Stable/'F1+').

Fitch believes the three-tranche bond issues will improve the company's liquidity profile by extending the company's debt maturity profile. In June 2012, Fitch noted that IPIC's liquidity appeared stretched for its current 'AA' credit rating due to low cash balances relative to upcoming debt maturities at the parent level. In Fitch's view, this new bond issuance improves the company's funding position and supports the company's current credit profile.

KEY DRIVERS

State-Related Rating:
International Petroleum Investment Company PJSC's (IPIC) ratings are aligned with Abu Dhabi's sovereign ratings under Fitch's parent and subsidiary methodology. Fitch considers sovereign-owned IPIC to be a strategic asset to the government in its role as an investment vehicle for the state, primarily in the domestic and foreign hydrocarbon and petrochemical sectors.

Standalone Credit Profile:
IPIC's standalone credit profile, based on its relatively weak credit ratios compared with other investment holding companies, is assessed in the 'BB' rating category. As of H112, IPIC's parent level debt amounted to USD18.6bn. The company's consolidated LTM-H112 liquidity ratio, defined by Fitch as interest income plus cash over interest expense, was 3.7x, which is slightly down compared with the 2011 figure of 4.4x, but still comfortable for the current rating.

IPIC's Strategic Role:
IPIC's high investment-grade ratings are supported by a government mandate to structure a portfolio of core investment holdings that are integrated and connected with Abu Dhabi's economy and development strategy. IPIC is also responsible for managing key investment projects that are considered important to the United Arab Emirates' (UAE) economy and national security. The company has indicated that it will move forward with construction of the 200,000 barrels a day (b/d) refinery at Fujairah on the Indian Ocean. The project is in the front-end engineering design (FEED) stage. IPIC anticipates completion by mid-2016.

Oil Pipeline Project:
IPIC is also constructing the Abu Dhabi Crude Oil Pipeline (ADCOP), which will allow the UAE to increase exports from its Fujairah terminal. The pipeline will have the capacity to transport 1.5 million b/d, and up to 1.8 million b/d periodically. Major construction work was completed in 2011 and first cargo was shipped in July 2012.

RATING SENSITIVITY GUIDANCE:
Positive: Future developments that could lead to positive rating actions include:

- A positive change to the sovereign ratings of Abu Dhabi is highly likely to result in a similar change to IPIC's ratings, as their ratings are aligned under Fitch's parent and subsidiary rating methodology.

Negative: Future developments that could lead to negative rating action include:

- A negative change to the sovereign ratings of Abu Dhabi is highly likely to result in a similar change to IPIC's ratings, as their ratings are aligned under Fitch's parent and subsidiary rating methodology.

- IPIC failing to maintain a ratio of total portfolio value to total net borrowings of more than 1.5x at the IPIC parent company level.

- IPIC embarking on a fundamental deviation from its core energy investment mandate with or without the support or involvement of the government.

- An onerous repayment schedule that puts downward pressure on the company's liquidity.

LIQUIDITY & DEBT STRUCTURE

Liquidity Improved:
IPIC's liquidity is improved following the most recent Eurobond issuance. Fitch understands that IPIC will utilise all proceeds towards refinancing. Proceeds could also be used to repay some short-term debt maturing by year-end 2012. The company's debt maturity profile is partly extended and alleviates some refinancing pressure over the next 12 to 18 months. IPIC still has approximately USD3bn of debt maturing in 2013 at the parent company level.

FULL LIST OF RATINGS
IPIC
Long-term foreign currency IDR: 'AA'; Outlook Stable
Short-term IDR: 'F1+'
Long-term local currency IDR: 'AA'; Outlook Stable
Senior unsecured debt: 'AA'
IPIC GMTN Limited
Senior unsecured debt: 'AA'

Contact:
Primary Analyst
Jakub Zasada
Associate Director
+48 22 338 6295

Supervisory Analyst
Jeffrey Woodruff, CFA
Senior Director
+44 20 3530 1281
Fitch Ratings Limited
30 North Colonnade
London, E14 5GN

Committee Chairperson
Erwin Van Lumich, CFA
Managing Director
+34 93 323 8403

Media Relations
Peter Fitzpatrick, London
Tel: +44 20 3530 1103
Email: peter.fitzpatrick@fitchratings.com.

© Press Release 2012