Fitch Ratings-Paris/London-March 08: Fitch Ratings has downgraded Bahrain Mumtalakat Holding Company's (Mumtalakat) Long-Term Issuer Default Ratings (IDR) to 'BB-' from 'BB+' and maintained it on Rating Watch Negative (RWN). The senior unsecured long-term rating on Mumtalakat Sukuk Holding Company's unsecured guaranteed notes has been downgraded to 'BB-' from 'BB+' and maintained on RWN.
Fitch has also downgraded The Oil and Gas Holding Company (nogaholding)'s Long-Term Foreign- and Local-Currency IDRs to 'BB-' from 'BB+'. The Outlook is Stable, mirroring that on the Bahrain sovereign's. The long-term ratings on nogaholding's global medium term note programme (senior unsecured) and nogaholding's USD1 billion senior unsecured notes due 25 October 2027 have been also downgraded to 'BB-' from 'BB+'.
A full list of rating actions is below.
KEY RATING DRIVERS
The rating actions follow the downgrade of the Long-Term IDRs of Mumtalakat and nogaholding's sponsor, Bahrain, to 'BB-' from 'BB+' on 1 March 2018 (see 'Fitch Downgrades Bahrain to 'BB-'; Outlook Stable' at
Fitch classifies Mumtalakat and nogaholding as credit-linked entities under its Government Related Entities rating criteria. Their ratings are equalised with those of Bahrain, reflecting their status as wholly owned corporations, and strong track record and expectations of control by and their prominent policy missions for the sovereign. Fitch considers there is a very high probability of the company receiving extraordinary government support, if needed.
Fitch placed Mumtalakat's long-term ratings on RWN on 8 December 2017, on publication of the Exposure Draft on Government Related Entities criteria. Any rating change is most likely to factor in a weaker link with the government sponsor. We do not expect any downgrade to exceed one notch.
As Mumtalakat and nogaholding's ratings are credit-linked to those of the sovereign, any rating action on the sovereign would be reflected in Mumtalakat and nogaholding's ratings.
Changes to Mumtalakat and nogaholding's Long-Term IDRs would also be reflected in their senior unsecured bonds ratings
Fitch expects to resolve the RWN on Mumtalakat within the next three months following further discussions with Mumtalakat's management and the government officials.
FULL LIST OF RATING ACTIONS
Bahrain Mumtalakat Holding Company
Long-Term IDR: downgraded to 'BB-' from 'BB+'; maintained on RWN
Short-Term Foreign-Currency IDR: affirmed at 'B'
Senior unsecured debt: downgraded to 'BB-' from 'BB+'; maintained on RWN
Mumtalakat Sukuk Holding Company
Senior unsecured long-term rating of the USD600 million 4% guaranteed notes due 25
November 2021 downgraded to 'BB-' from 'BB+'; maintained on RWN
Long-Term Foreign- and Local-Currency IDRs: downgraded to 'BB-' from 'BB+; Outlook Stable
Short-Term Foreign-Currency IDR: affirmed at 'B'
Senior unsecured debt: downgraded to 'BB-' from 'BB+'
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Additional information is available on
Government-Related Entities Rating Criteria (pub. 07 Feb 2018)
International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016)
Sukuk Rating Criteria (pub. 14 Aug 2017)
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