- 05 Jul 2020
TAQA Credit Ratings Upgraded by Moody’s and Fitch Following Successful Transfer of Assets from Abu Dhabi Power Corporation
• Moody’s upgrades issuer ratings to Aa3 from A3 and standalone rating to baa1
• Fitch upgrades issuer ratings to AA- from A and standalone rating to bbb+
• Issuer ratings only one notch below Government of Abu Dhabi’s sovereign ratings
Abu Dhabi National Energy Company (TAQA) announced, today, that international credit rating agencies Moody’s Investors Service (Moody’s) and Fitch Ratings (Fitch) have upgraded its final issuer ratings by three notches to Aa3 from A3 and by two notches to AA- from A, respectively. The ratings represent the fourth highest investment grade rating on each of the agencies’ rating scales and are based on solid, investment grade standalone ratings of ‘baa1’ and ‘bbb+’ assigned by Moody’s and Fitch, respectively. The standalone ratings are boosted by strong implied support from the Government of Abu Dhabi, TAQA’s majority indirect owner, to arrive at the final issuer ratings, as per the agencies’ rating methodologies.
The upgrades to TAQA’s credit ratings come within days of completing the landmark transaction between TAQA and Abu Dhabi Power Corporation (ADPower), which saw the transfer of the majority of ADPower’s power and water generation, transmission, and distribution assets to TAQA in exchange for 106,367,950,00 new shares.
Jasim Husain Thabet, the newly appointed Chief Executive Officer and Managing Director of TAQA, said: “The news of our upgraded issuer ratings demonstrates the strength of TAQA’s new position as a leading player in EMEA’s utilities sector. Our ambition to deliver and sustain strong financial performance through a fully integrated and diverse asset portfolio with strong growth prospects makes TAQA a compelling opportunity for equity and credit investors alike. To that end, we will commit to maintaining solid investment grade standalone credit ratings through proactive and disciplined financial management.”
TAQA is now the UAE’s third largest publicly traded company by market capitalisation and among the top 10 integrated utilities companies in the Europe, Middle East and Africa (EMEA) region.
Moody’s announced the upgrade shortly after the news of the transfer, stating on its website: “The upgrade reflects Moody’s view that the transfer of the ADPower assets reinforces the strategic importance of TAQA for the government of Abu Dhabi (Aa2 stable). The additional assets entrench TAQA’s dominance over electricity generation, transmission and distribution and water desalination in Abu Dhabi. TAQA becomes a vertically integrated utility with total assets of around AED200 billion ($54 billion) and a more diversified energy generation mix. Indirect government ownership will increase to 98.6% from 74.1%.”
In Fitch’s official announcement, it stated: “TAQA holds a monopoly position in Abu Dhabi’s electricity and water transmission and distribution sectors, and a leading market position in generation. TAQA provides about 95% of the electricity and water consumed in Abu Dhabi. Fitch expects TAQA to have a pronounced importance to Abu Dhabi’s electricity and water markets, UAE Energy Strategy 2050, and its role in diversifying the Emirates’ generation towards renewables.”
TAQA currently has 23 GW of power generation capacity globally and 913 MIGD of water desalination capacity, of which 1.4 GW are from renewable sources. TAQA also has an additional 4.4 GW and 200 MIGD in power generation and water desalination capacity under development, including 2 GW from renewable sources. Across the UAE, its assets now include 12 power and water generation plants in operation. TAQA owns all of Abu Dhabi’s power and water transmission and distribution companies in addition to its existing international assets in Canada, Ghana, India, Iraq, Morocco, the Netherlands, Oman, Saudi Arabia, the United Kingdom and the United States.