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TEXT-Fitch assigns IPIC's notes final 'AA' rating
November 28, 2012 / 2:50 PM / 5 years ago

TEXT-Fitch assigns IPIC's notes final 'AA' rating

Nov 28 - Fitch Ratings has assigned IPIC GMTN Limited's USD750m notes
maturing 2015, EUR800m notes maturing 2018 and EUR850m notes maturing 2023 final
senior unsecured ratings of 'AA'. The notes are irrevocably and unconditionally
guaranteed by the International Petroleum Investment Company (IPIC) PJSC, which
is wholly owned by the Government of the Emirate of Abu Dhabi
('AA'/Stable/'F1+').

Fitch believes the three-tranche bond issues will improve the company's
liquidity profile by extending the company's debt maturity profile. In June
2012, Fitch noted that IPIC's liquidity appeared stretched for its current 'AA'
credit rating due to low cash balances relative to upcoming debt maturities at
the parent level. In Fitch's view, this new bond issuance improves the company's
funding position and supports the company's current credit profile.

KEY DRIVERS
State-Related Rating:
International Petroleum Investment Company PJSC's (IPIC) ratings are aligned
with Abu Dhabi's sovereign ratings under Fitch's parent and subsidiary
methodology. Fitch considers sovereign-owned IPIC to be a strategic asset to the
government in its role as an investment vehicle for the state, primarily in the
domestic and foreign hydrocarbon and petrochemical sectors.

Standalone Credit Profile:
IPIC's standalone credit profile, based on its relatively weak credit ratios
compared with other investment holding companies, is assessed in the 'BB' rating
category. As of H112, IPIC's parent level debt amounted to USD18.6bn. The
company's consolidated LTM-H112 liquidity ratio, defined by Fitch as interest
income plus cash over interest expense, was 3.7x, which is slightly down
compared with the 2011 figure of 4.4x, but still comfortable for the current
rating.

IPIC's Strategic Role:
IPIC's high investment-grade ratings are supported by a government mandate to
structure a portfolio of core investment holdings that are integrated and
connected with Abu Dhabi's economy and development strategy. IPIC is also
responsible for managing key investment projects that are considered important
to the United Arab Emirates' (UAE) economy and national security. The company
has indicated that it will move forward with construction of the 200,000 barrels
a day (b/d) refinery at Fujairah on the Indian Ocean. The project is in the
front-end engineering design (FEED) stage. IPIC anticipates completion by
mid-2016.

Oil Pipeline Project:
IPIC is also constructing the Abu Dhabi Crude Oil Pipeline (ADCOP), which will
allow the UAE to increase exports from its Fujairah terminal. The pipeline will
have the capacity to transport 1.5 million b/d, and up to 1.8 million b/d
periodically. Major construction work was completed in 2011 and first cargo was
shipped in July 2012.

RATING SENSITIVITY GUIDANCE:
Positive: Future developments that could lead to positive rating actions
include:
- A positive change to the sovereign ratings of Abu Dhabi is highly likely to
result in a similar change to IPIC's ratings, as their ratings are aligned under
Fitch's parent and subsidiary rating methodology.

Negative: Future developments that could lead to negative rating action include:
- A negative change to the sovereign ratings of Abu Dhabi is highly likely to
result in a similar change to IPIC's ratings, as their ratings are aligned under
Fitch's parent and subsidiary rating methodology.
- IPIC failing to maintain a ratio of total portfolio value to total net
borrowings of more than 1.5x at the IPIC parent company level.
- IPIC embarking on a fundamental deviation from its core energy investment
mandate with or without the support or involvement of the government.
- An onerous repayment schedule that puts downward pressure on the company's
liquidity.

LIQUIDITY & DEBT STRUCTURE
Liquidity Improved:
IPIC's liquidity is improved following the most recent Eurobond issuance. Fitch
understands that IPIC will utilise all proceeds towards refinancing. Proceeds
could also be used to repay some short-term debt maturing by year-end 2012. The
company's debt maturity profile is partly extended and alleviates some
refinancing pressure over the next 12 to 18 months. IPIC still has approximately
USD3bn of debt maturing in 2013 at the parent company level.

FULL LIST OF RATINGS
IPIC
Long-term foreign currency IDR: 'AA'; Outlook Stable
Short-term IDR: 'F1+'
Long-term local currency IDR: 'AA'; Outlook Stable
Senior unsecured debt: 'AA'

IPIC GMTN Limited
Senior unsecured debt: 'AA'

Additional information is available at www.fitchratings.com. For regulatory
purposes in various jurisdictions, the supervisory analyst named above is deemed
to be the primary analyst for this issuer; the principal analyst is deemed to be
the secondary.

The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.

Applicable criteria, 'Corporate Rating Methodology' and 'Parent and Subsidiary
Rating Linkage', both dated 8 August 2012 are available at www.fitchratings.com.

Applicable Criteria and Related Research:
Corporate Rating Methodology
Parent and Subsidiary Rating Linkage

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