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S&P and Moody's assign ratings to TAQA's $1b CP programme

The company is expected to issue CP under the programme for general corporate purposes, with maturities of up to 397 days. Back-up liquidity support to the programme is provided through existing cash balances (TAQA held $1.7 billion in cash at June 30, 2007) at the company and a revolving credit facility from the National Bank of Abu Dhabi (A+/Stable/A-1).

Although there are no formal guarantees, S&P factors implicit sovereign support into the ratings on TAQA, reflecting its importance to the Emirate and its status as a government-related entity. This reflects the company's position as a key entity in the economy of Abu Dhabi as the majority owner in critical power and water desalination assets, and its importance as a national vehicle for global investment and public policy.

Meanwhile Moody's Investors Service has assigned Prime-1 short term issuer ratings to Abu Dhabi National Energy Company , as well as Prime-1 ratings to TAQA's proposed $1 billion Commercial Paper Programme. TAQA's long term issuer and bond ratings are Aa2 with a stable outlook.

The short term ratings reflect the strength of TAQA's long term credit profile as incorporated in its Aa2 ratings, and the solid liquidity that

TAQA demonstrates a sound funding structure and little near-term maturities. The CP Programme also benefits from a committed $1 billion three-year revolving credit facility which acts and will be used solely as back-up liquidity for the Programme. The facility contains no restrictive covenants or rating triggers.

TAQA's ratings incorporate the assumption of high government support, thus providing significant credit enhancement over its baseline credit assessment of 11, which measures TAQA's long term credit profile excluding any government support assumptions. However, TAQA is turning into a flagship energy investment company for the Abu Dhabi government, both in terms of its commitment to expanding on the global energy markets, but also as a benchmark issuer on the nascent Middle East capital market. While gradually expanding outside of Abu Dhabi, TAQA's dependence on the Abu Dhabi government remains high.

TAQA was established in 2005 as the government-controlled entity tasked with holding the majority of the Abu Dhabi state's power generation and water desalination plants, and to establish Abu Dhabi's footprint in the energy sector internationally. The company is 75.1 per cent indirectly owned by the government of Abu Dhabi.