Mubasher: The credit profile of Gulf Investment Corporation (GIC) has gradually improved as a result of lower market exposure and continued deleveraging, Moody's Investors Service said in a report on Tuesday.
Nonetheless, the absence of callable capital and focus on equity investment constrain its credit profile, the report added.
After considerable deleveraging, the debt-to-equity ratio halved between 2012 and 2015, to just 53%. Looking ahead, Moody's says GIC's balance sheet could expand again, with new investment opportunities created by the re-pricing of assets in Gulf Cooperation Council (GCC) countries, it explained.
“However, a significant portion of GIC's funding comes from deposits, and although they have proven stable, the potential for balance-sheet maturity mismatches may increase if its portfolio of principal investments expands again.”
The rating agency considers the risks associated with the geographic concentration of GIC's activities to be partly mitigated by the sectoral diversification of its businesse. Moody's also considers that GIC's capital buffers and liquidity position will be sustained.
The company’s healthy state of liquidity reflects a comfortable term to maturity, a stock of discounted liquid assets, almost twice larger than its total debt outstanding, and access to a diversified investor base, the report indicated.
