Moody's Investors Service has today assigned an Aa2 issuer rating to Qatari Diar Finance Q.S.C. ("QDF") and provisional issue ratings of (P)Aa2 to the proposed USD bond issuance by QDF. The outlook is stable. This is the first time that Moody's rates QDF and the proposed bonds.
"QDF's Aa2 ratings are in line with the sovereign rating of Qatar because the government, acting through the Ministry of Economy and Finance, will unconditionally and irrevocably guarantee the payments in respect of the bonds that QDF plans to issue," says Martin Kohlhase, a Moody's Assistant Vice President based in Dubai and lead analyst for QDF.
The proposed transaction stipulates that QDF will (directly or indirectly) lend the net proceeds of the bond issuance to three project subsidiaries of Barwa Real Estate Company Q.S.C. ("Barwa") in line with separate transaction documents (not reviewed by Moody's) structured in accordance with Islamic Shari'ah law. Qatari Diar, the owner of QDF, also holds a 45% stake in Barwa, which is one of the largest real estate developers in Qatar. The proceeds of the proposed bond issue will be used by the three Barwa project subsidiaries for the development of (i) Barwa City, a mixed-use property development project in Doha, the capital of Qatar, (ii) Barwa Financial District, a fully integrated business complex for financial services firms located in Doha, and (iii) Barwa Commercial Avenue, a mixed-use property development project in Doha, and also for the repayment of certain debt associated with the three projects.
Moody's understands that QDF will meet all its financial obligations, i.e. (accrued) interest and principal, through matching funds that it will receive directly or indirectly from the three Barwa project subsidiaries under separate transactions (not reviewed by Moody's) structured under Islamic Shari'ah law principles. Shortfalls, if any, will be covered by the guarantee, which assures timely and full payments.
The outlook is stable and reflects that of the rating for the Government of Qatar. QDF ratings are expected to move in line with any movements in the ratings of the Qatari government and assume that the government ownership, the mandate and oversight of the company remain unchanged.
Incorporated in Doha/Qatar in June 2010, QDF is a wholly-owned entity of Qatari Diar Real Estate Investment Company (unrated), which in turn is fully owned by the government of Qatar through its sovereign wealth vehicle Qatar Investment Authority. QDF is a special purpose vehicle that has been solely set up for the purpose of the issuance of the proposed bonds and for lending the proceeds directly or indirectly to the three Barwa project subsidiaries.