KIPCO hit by Moody’s downgrade, outlook negative By Investing.com

KUWAIT – Kuwait Projects Company (Holding) KSCP (KIPCO), the guarantor of Kuwait Projects Co SPC Limited, has been subject to a rating downgrade by Moody’s (NYSE:) Investors Service. The rating agency has lowered KIPCO’s Corporate Family Rating (CFR) to B1 from Ba3 and Probability of Default Rating (PDR) to B1-PD from Ba3-PD. In addition, Moody’s downgraded the interim ratings of the US$3 billion senior unsecured Euro Medium Term Note (EMTN) program issued by Kuwait Projects Co SPC Limited to (P)B1 from (P)Ba3. The ratings of secured senior unsecured bonds due 2026 and 2027 were also cut to B1 from Ba3. However, the other short-term rating supported by (P)NP was affirmed. The outlook for all ratings is negative.

Moody’s justifies the downgrade with the forecast that the market value leverage of KIPCO ( MVL (NS:)) will remain above 45% for 2024 and 2025, exceeding original expectations. The agency expects funds from operations (FFO) interest coverage to remain low at 0.8x in 2024, with a slight improvement to around 1x in 2025. Despite KIPCO’s ample liquidity For next year, significant bond maturities of $500 million each in October 2026 and February 2027 are a concern. While Moody’s expects that KIPCO will secure the financing to meet these maturities in advance, excluding any delays could significantly weaken the company’s liquidity.

The CFR B1 rating continues to reflect the strong market position of KIPCO’s portfolio companies and management’s proactive actions to improve the operational and financial performance of its key holdings. The rating also takes into account that around 60% of the portfolio value consists of listed investments and shareholders’ connections to Kuwait’s ruling family.

In a notable development, KIPCO has informed Moody’s of its intention to voluntarily withdraw from all Moody’s ratings. This decision comes against the backdrop of the agency’s recent rating adjustments and negative outlook.

This news is based on a press release from Kuwait Projects Co SPC Limited.

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