Standard & Poor's Ratings Services said today it assigned its 'AA' long-term senior unsecured debt ratings to the $1 billion five year and $1.5 billion 10 year bonds issued by Abu Dhabi special purpose entity IPIC GMTN Ltd. (not rated). IPIC GMTN is a wholly-owned subsidiary of International Petroleum Investment Company (IPIC; AA/Stable/A-1+) and has been established to issue the bonds under a guaranteed global medium-term note program. The payment of amounts due on the notes is unconditionally and irrevocably guaranteed by IPIC.
We have rated IPIC, a 100% state-owned corporation based in Abu Dhabi (AA/Stable/A-1+) in the United Arab Emirates, according to our criteria for government-related entities. Although the government does not formally guarantee IPIC's liabilities, we equalize the ratings on IPIC with those on the government of Abu Dhabi. This assessment is based on what we believe is the company's "critical" role for Abu Dhabi's official long-term development strategy and our view of an "integral" link with the government. Accordingly, we consider that extraordinary government support in times of financial stress is "almost certain".
IPIC's public policy role consists of implementing the government's long-term development strategy, as outlined in the government's "Economic Vision 2030" plan, by developing the hydrocarbon and petrochemical industries and by implementing strategic national projects with a view to securing demand for Abu Dhabi's oil in times of crisis. IPIC operates on behalf of the government and only implements projects approved by the government. This, coupled with IPIC's operational proximity to the Abu Dhabi government and repeated governmental capital increases, leads Standard & Poor's to conclude that the government has the capacity and willingness to continue to provide substantial ongoing support to IPIC's operations and to intervene in a timely manner if the company were to require extraordinary financial support. This assessment was underlined in March 2010, when Abu Dhabi's Department of Finance took the rare step of declaring its "full and unconditional" support for IPIC, a company it deems "irreplaceable".
