Riyadh – Moody’s Investors Service has downgraded Arabian Centres Company's (ACC) corporate family rating (CFR) to ‘Ba2’ from ‘Ba1’.
The rating on the $500 million Sukuk, which was issued by Arabian Centres Sukuk Limited and due in 2024, was downgraded to ‘Ba3’ from ‘Ba2’, according to a press release on Tuesday.
Meanwhile, all ratings were placed on review for downgrade and the outlook has been changed to ratings under review from stable.
The downgrade of the CFR was caused by an expected rise in leverage stemming from a likely decrease in rental income over the next 12 months due to the business disruptions resulted from the coronavirus (COVID-19) outbreak.
The Ba2 rating on the CFR captures the long-term positive fundamentals for shopping mall operators in Saudi Arabia, ACC's adequate liquidity profile with no material debt maturing before 2024, and the company's strong market position.
“The Ba3 rating on the outstanding Sukuk is one notch lower than the CFR to reflect its subordination to secured debt which represents the predominant class of debt in the capital structure,” the statement said.
Arabian Centres is the largest owner and operator of retail malls in Saudi Arabia with a total of 21 existing malls. The portfolio's estimated fair value (FV) of SAR 22.7 billion ($6 billion) as of 31 December 2019.
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