Mubasher: Moody’s Investor Service (Moody’s) on Wednesday revealed a report on Ezdan Holding Group after placing the company’s rating Ba1 on review for downgrade.
Moody's action highlights the rift between Qatar and four Arab countries led by Saudi Arabia, which has taken its toll on Ezdan’s financial situation, according to Moody's Assistant Vice President - Analyst Lahlou Meksaoui saying.
"The rating action also reflects the weakening liquidity as a result of the decrease in Ezdan's equity portfolio and tighter covenant headroom," Meksaoui added.
Qatar’s operating environment put the real estate developer under pressure and affected its retail and residential assets, which resulted in higher than expected vacancy rates, according to Moody’s report.
“The rating under review for downgrade also reflects covenant headroom under pressure (debt-service coverage ratio of 1.12x, as of September 2017) as well as uncertainties surrounding financial policies, as a result of the decrease in Ezdan's equity portfolio with the total value of available-for-sale listed equity investments decreasing to QAR3.7 billion as of 30 September 2017, from QAR6.5 billion on 31 December 2016,” the report said.
Moody’s review relied on many factors as follows:
· The continuous weak performance and impact on profitability and cash flow.
· Credit metrics relative to ratings guidance and Ezdan's liquidity profile.
· Financial policies and impact of the change in strategy.
