Moody's downgrades, reclassifies Abu Dhabi's Aldar

Moody's has cut Abu Dhabi's Aldar Properties' credit ratings by two notches and said it was no longer classifying the firm as a government-related issuer, citing uncertainty over future government support.

The struggling developer, rescued by a $5.2 billion bailout by Abu Dhabi this year, was downgraded to B2 from Ba3 with outlook changed to negative, the ratings agency said in a statement.

Moody's also downgraded Aldar's $1.25bn bond due in 2014 to B1 and its Dh3.75 billion ($1.02bn) sukuk due in 2013.

"Further extraordinary government support over the medium to long-term is in Moody's view less certain following public guidance provided by the government of Abu Dhabi in January 2011 in which it reiterated its position that it views Aldar as a private company," it said.

Moody's added it is now assessing Aldar's rating on a standalone basis while also incorporating the potential for shareholder support from state-owned investment vehicle Mubadala.

The assessment came despite reduced concerns about the developer's ability to meet debt obligations during 2011 and the first half of 2012, Moody's said.

The builder of the Yas Marina Formula One circuit returned to profit in the first quarter ending a five-quarter losing streak.

Aldar said in January it would sell assets worth $1.49bn to the government to meet its looming debt obligations and would also issue Dh2.8 in convertible bonds to Mubadala and raise $2.97, partly through asset sales.

"Although Aldar still benefits significantly from projects awarded and reimbursed by the government of Abu Dhabi, Moody's factors into the rating that from 2014 onwards the company will be increasingly dependent on generating its own operating cash flows from predominantly recurring rental revenues."

Aldar's shares were down 4.4 per cent at Dh1.29 as at 0910 GMT, underperforming Abu Dhabi's index which eased 0.3 per cent.