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Fitch Ratings has placed Abu Dhabi National Energy Company (TAQA)’s long-term issuer default rating (IDR) and senior unsecured debt rating of 'A' on rating watch positive (RWP).
In the first week of February, the board of Abu Dhabi Power Corporation (ADPower) submitted an offer to the board of TAQA under which ADPower would transfer the majority of its water and electricity generation, transmission and distribution assets to TAQA, in return for 106,367,950,000 convertible shares in the latter.
Based on ADPower’s proposed asset swap deal, the combined utility will have assets worth $54.5 billion, Reuters reported.
The ADPower offer sets out an assets transfer valued at about 120 billion UAE dirhams ($32.67 billion) at end-2018.
Fitch’s RWP follows the announcement, as it sees that TAQA's rating could benefit from increased indirect government shareholding, and strengthening of the links under Fitch's Government-Related Entities Rating (GRE) criteria between TAQA and Abu Dhabi (AA/Stable).
“The RWP also reflects the transfer of regulated transmission and distribution assets, resulting in a possible improvement in TAQA's Standalone Credit Profile,” Fitch said.
“However, we have yet to understand and assess TAQA's financial policy after the transaction and expect to resolve the RWP once it closes, which may be in 2H20,” Fitch added.
(Writing by Gerard Aoun; Editing by Seban Scaria)
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