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Fitch Ratings has affirmed Gulf Investment Corporation’s (GIC’s) long-term issuer default rating (IDR) at A- with a stable outlook and short-term IDR at F1, Fitch Ratings said in a report released today.
The agency has affirmed GIC’s viability rating (VR) at bb and support rating at 1.
“The IDRs and support rating reflect an extremely high willingness and ability of the sovereign shareholders to provide support to GIC, a development investment company, if required,” Fitch Ratings said. GIC’s shareholders are the six countries of the Gulf Corporation Council (GCC), which hold equal shares.
“Our assessment of the GCC’s ability to support takes into account the creditworthiness of the sovereign shareholders: Kuwait (AA/Stable), Saudi Arabia (AA-/Negative), Qatar (AA/Stable), Bahrain (BBB-/Negative), UAE and Oman, and GIC’s modest size relative to its shareholders’ financial strength,” Fitch Ratings said.
GIC is well-capitalised, which mitigates its market risk exposure to some extent, Fitch Ratings said.
“Its Basel III capital adequacy ratios (total capital adequacy ratio of 45.9 per cent and leverage ratio of 47 per cent at end-2015) are strong but appropriate given its exposure to less liquid private equity investments held in the principal investments (PI) portfolio and business model risk,” Fitch Ratings said.
Fitch Ratings said GIC’s profitability weakened in 2015 mainly due to losses in one of its associates. Fitch said it believes that GIC’s earnings and profitability are likely to be volatile given the institution’s sensitivity to investment performance and market volatility under challenging operating conditions.