RAM Ratings has reaffirmed the AA2/Stable rating of Bahrain Mumtalakat Holding Company BSC’s (Mumtalakat or the Company) RM3 billion Sukuk Murabahah Programme (2012/2032).

Published on 21 August 2014

RAM Ratings has reaffirmed the AA2/Stable rating of Bahrain Mumtalakat Holding Company BSC’s (Mumtalakat or the Company) RM3 billion Sukuk Murabahah Programme (2012/2032). Mumtalakat is the Bahraini government’s wholly owned investment arm, with the strategic role of spearheading structural changes in its domestic economy.
RAM considers Mumtalakat as an extension of the Bahraini government and a government-linked entity, based on the Company’s strategic role as well as the critical links and strong relationship between the 2 entities; the likelihood of extraordinary government support for the Company is deemed very high. As such, Mumtalakat’s rating is equated with Bahrain’s sovereign ratings; RAM’s assessment of the sovereign’s ratings will also have a bearing on Mumtalakat’s long-term rating and outlook.
Mumtalakat’s investment portfolio spans a wide range of industries, with key assets in manufacturing, aviation, telecommunication and financial services. The Company’s portfolio of investee companies is mainly concentrated in Bahrain. Meanwhile, Mumtalakat’s dividend income is almost entirely derived from its direct investments in these sectors, except aviation. While the Company’s key asset and largest dividend contributor, Aluminium Bahrain (Alba), is most susceptible to commodity price volatility and cyclicality, this is moderated by Alba’s significant cost advantage and healthy operating performance.
In fiscal 2013, Mumtalakat’s overall performance improved and returned to the black, mainly driven by the ongoing restructuring of Gulf Air Company and the Bahraini government’s substantial financial support for the national carrier, which had reduced the latter’s losses. Mumtalakat’s balance sheet is deemed conservative given its company- and group-level average gearing ratios that have been kept below 0.5 times through the last 5 years. The Company also derives adequate liquidity and financial flexibility from its company-level cash balances, highly liquid treasury holdings, unused credit lines, and ready access to bank and debt financing.

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Cheong Kah Weng
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kahweng@ram.com.my