Advertisement
|08 March, 2018

Fitch downgrades 2 Bahraini GREs on sovereign action

Fitch placed Mumtalakat's long-term ratings on RWN on 8 December 2017.

Logo of Mumtalakat is seen as an employee walks out at their headquarters Manama, Bahrain February 21, 2018.

Logo of Mumtalakat is seen as an employee walks out at their headquarters Manama, Bahrain February 21, 2018.

REUTERS/Hamad I Mohammed
(The following statement was released by the rating agency)

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 ).

Advertisement

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.

RATING SENSITIVITIES

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

nogaholding

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+'

Contact:

Primary Analyst

Christophe Parisot

Managing Director

+33 1 44 29 91 34

Fitch France S.A.S.

60 rue de Monceau

Paris 75008

Secondary Analyst

Fernando Mayorga

Managing Director

+34 93 323 8407

Committee Chairperson

Guido Bach

Senior Director

+49 69 768076 111

Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com.

Additional information is available on

Applicable Criteria

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)

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

Solicitation Status

Endorsement Policy

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT . PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT . FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Copyright © 2018 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO’s credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see ), other credit rating subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.