FRANKFURT (Standard & Poor's) March 7, 2011--Standard & Poor's Ratings Services said today it will assign its 'AA' long-term senior unsecured debt rating to a proposed bond that will be issued by IPIC GMTN Ltd. (not rated) under its global medium-term note program.
IPIC GMTN Ltd. is a special purpose entity that is a wholly-owned subsidiary of the 100% state-owned, Abu-Dhabi-based International Petroleum Investment Company (IPIC; AA/Stable/A-1+). The entity was established for the issuance of notes under its guaranteed global medium-term note program. The payment of amounts due under this program is unconditionally and irrevocably guaranteed by IPIC.
The ratings on IPIC, based in Abu Dhabi (AA/Stable/A-1+) in the United Arab Emirates (UAE), incorporate our enhanced criteria on government-related entities. Although the government does not formally guarantee IPIC's liabilities, we equalize the ratings on IPIC with those on the government of Abu Dhabi. This assessment is based on what we believe is the company's critical role for Abu Dhabi's official long-term development strategy and our view of its integral link with the government. Accordingly, we consider that extraordinary government support in times of financial stress is almost certain.
IPIC's public policy role consists of implementing the government's long-term development strategy--as outlined in the government's "Economic Vision 2030" plan--by developing the hydrocarbon and petrochemical industries and by implementing strategic national projects with a view to securing demand for Abu Dhabi's oil in times of crisis. IPIC operates on behalf of the government, and its board of directors is appointed by Emiri decree. This, coupled with IPIC's operational proximity to the Abu Dhabi government and repeated governmental capital increases, leads us to conclude that the government has the capacity and willingness to continue to provide substantial ongoing support to IPIC's operations and to intervene in a timely manner if the company were to require extraordinary financial support. This assessment was underlined in March 2010, when Abu Dhabi's Department of Finance took the rare step of declaring its "full and unconditional" support for IPIC, a company it deems "irreplaceable".
On Feb. 16, 2011, IPIC made a voluntary offer to acquire the entire issued share capital that it did not already own (52.9%) of Spanish integrated oil and gas company CEPSA (not rated). This offer, we understand, was in line with IPIC's strategy to secure refining capacity for Abu Dhabi crude. The offer amounts to close to €4.0 billion and the proposed bond issue is to contribute to the funding of the acquisition. In our view, the acquisition further strengthens IPIC's role within Abu Dhabi's economy. Consequently, we have not changed our view of the government's "almost certain" likelihood of providing extraordinary support to IPIC in an event of stress, which underlies the equalization of the ratings on IPIC with those of the government.
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RELATED CRITERIA AND RESEARCH
Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
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© Press Release 2011
