|13 October, 2019

Moody's upgrades APICORP to Aa2 with stable outlook

The ratings agency expects APICORP's higher quality of funding and very strong asset performance to stay

Image used for illustrative purpose only. Riyadh Skyline

Image used for illustrative purpose only. Riyadh Skyline

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Moody’s Investors Service upgraded Arab Petroleum Investments Corporation’s (APICORP) long-term issuer and senior unsecured rating to Aa2 and changed the company’s outlook to stable from positive.

“The key drivers for the upgrade include steady improvement that the corporation, a multilateral development bank owned by the member states of (the Kuwait-headquartered) Organisation of Arab Petroleum Exporting Countries (OAPEC), has made in its liquidity and funding profile by diversifying its funding sources,” Moody’s said in a statement.

“This has allowed APICORP to significantly reduce its reliance of short-term wholesale deposits and eliminate short-term asset-liability mismatches,” the statement added.

APICORP was established in 1975 by an international treaty between the ten Arab oil exporting countries. The company makes equity investments and provides project finance, trade finance, advisory and research services.

Moody’s said that the company’s track record of strong development-related asset performance, reflected in a substantial reduction of the non-performing assets (NPA) during the past three years, was a key factor in the upgrade.

The ratings agency expects the higher quality of funding and very strong asset performance to stay.

“The stable outlook reflects Moody's view that the corporation's creditworthiness will be supported by moderate leverage, high-quality development-related assets, further improvements in liquidity metrics and access to callable capital which underlines its shareholder support,” the statement said.

“The risks due to the challenging operating environment in a number of countries where APICORP operates, stemming mostly from the regional geopolitical tensions and the pressures posed by the moderate oil price environment, are balanced by the corporation's proven resilience to these risks over the past four years, the trend towards greater diversification of its portfolio, as well as its strong and improving corporate governance and risk management practices,” it added.

(Writing by Gerard Aoun, Editing by Anoop Menon)

(gerard.aoun@refinitiv.com

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