Masdar assigned debut ratings by Moody’s and Fitch

A well-diversified portfolio across clean energy and property helped the Abu Dhabi energy company fetch its investment grade ratings

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Masdar, a subsidiary of Mubadala Investment Company, received investment grade A2 and A+ ratings from Moody’s Investors Service and Fitch Ratings, respectively, marking the first time the Abu Dhabi renewable energy company is rated by global agencies.

An A2 rating is sixth-highest credit rating of Moody's and indicates low credit risk, as does the A+ rating by Fitch. Masdar is wholly owned by Mamoura Diversified Global Holding.

The ratings are a reflection of Masdar’s “robust portfolio of renewable energy and sustainable real estate assets and its crucial role in the diversification of the Abu Dhabi economy”, Musabbeh Al Kaabi, chief executive of the UAE Investments at Mubadala, said.

First-time credit ratings will give Masdar greater flexibility in financing and investing in new projects as the company looks to accelerate its global expansion.

“Masdar’s rating benefits from a conservative financial strategy and risk management, which are key governance considerations, including the absence of debt at the holding company level. This is balanced by its reliance on cash flow from associated companies that it does not fully control or that have significant debt of their own,” Moody’s said.

Moody’s expects Mamoura and the Abu Dhabi government to provide further support to Masdar, if required, to maintain Masdar's credit quality.

Masdar aims to strengthen the UAE’s position as one of the world’s leading exponents of green energy. The clean energy company currently operates in more than 30 countries with a total investment of about $20 billion.

Masdar’s diversification across clean energy and real estate along with its "attractive product offering" have also contributed to its ratings, Moody’s said.

The company has received consistent support since its inception in 2007, leading to a low reliance on external debt, despite the extent of the projects it is developing, Fitch said in a separate statement on Monday.

The ratings are a strong endorsement of Masdar’s financial stability and the “creditworthiness of our core business model, and reflect confidence in Masdar’s cash generation ability, unrestricted liquidity, and future growth prospects as an Abu Dhabi-based company”, Mohamed Jameel Al Ramahi, chief executive of Masdar, said.

Meanwhile, Moody's said it provided a stable outlook to Masdar, expecting it will “maintain prudent leverage at its subsidiaries and investments, with no material increase in financial obligations at the holding company level”.

“Masdar’s rating is supported by its long track record as a developer and owner of renewable generation assets, the good geographic position and attractive product offering of Masdar City and its strong portfolio of tenants,” the rating agency said.

There is a global appetite for investment in sustainable real estate projects, Fitch said. “Masdar City should benefit from the government’s explicit commitment to developing it, the existence of a free zone, as well as Abu Dhabi's strategic location between Europe and Asia,” it said.

Masdar's operations are also expected to benefit from the countries' efforts to decarbonise.

“The growing demand for renewable electricity to achieve national targets and international commitments enables the company to secure subsidies, offtake agreements and financing on commercially attractive terms,” Moody's said.

Masdar plans to double its renewable energy capacity in the next five years from current levels, with a sizeable part of its growth to come from South-East and Central Asia.

The Abu Dhabi company is looking to develop new projects in Malaysia, Vietnam, Indonesia and Taiwan, and is bullish on new opportunities in Uzbekistan, Kazakhstan, Azerbaijan and Armenia.