Dubai – Mubasher: The Islamic Corporation for the Development of the Private Sector (ICD) benefits from a strong capital position and solid liquidity, although weak asset quality forms a challenge, said a recent report published by Moody's Investors Service (Moody's).
Moody's assigned ICD a rating of Aa3 Stable.
"The ICD's liquidity is strong, and its leverage is characterized by a low debt-to-equity ratio and very low funding costs. However, its main challenge is its weak asset quality, with a history of high non-performing loans on its terms finance portfolio," says Mathias Angonin, an Analyst at Moody's.
The ICD maintains a liquidity coverage ratio of at least one year, as per its board-approved liquidity policy.
Leverage is low relative to other multilateral development banks (MDBs),although it is expected to deteriorate mildly over the next few years as the Corporation funds its expansion with new debt.
The ICD's operations can be divided into two main segments: equity participations in private sector entities (USD845 million, or 49% of assets) and term finance to cover working capital or raw materials
requirements of private sector entities (27%). The remaining assets are primarily liquid assets in the form of cash and commodity placements with banks (20%).
The ICD's rating also reflects the strong ability and high willingness of the ICD's main ultimate shareholders to support it as reflected in a continued increase in paid-in capital and low arrears on capital payments.
The ICD's main shareholder, the Islamic Development Bank (IsDB, Aaa with a stable outlook), is also supportive of its credit profile, even if its shareholding gradually diminishes.
Nevertheless, the absence of contractual callable capital sets the ICD apart from other, higher-rated MDBs.
