ADAM SCHRECKDUBAI, United Arab Emirates (AP) ¿ Another Abu Dhabi state investment fund has sought out credit ratings, a rare step toward greater transparency that could make buyout financing easier to get. The ratings issued Monday to International Petroleum Investment Co. by the three leading rating agencies are the same as the high investment-grade sovereign ratings held by the government of Abu Dhabi. IPIC Managing Director Khadem al-Qubaisi said the move will expand the company's funding options for new and existing projects. "While we have no immediate plans to raise external capital, the ratings will facilitate future engagement with the debt capital markets if IPIC wishes to pursue this," al-Qubaisi said in a statement. It could also help silence critics who argue that sovereign wealth investments ought to be less opaque about their dealings on the international stage. Al-Qubaisi said the ratings were a means of "reinforcing strong corporate governance principles and enhancing transparency." IPIC is fully owned by the government of Abu Dhabi, the largest of the seven semiautonomous city-states comprising the UAE and holder of most of the Persian Gulf country's vast oil wealth. Abu Dhabi is the federation's capital.
The company is the majority owner of Aabar Investments PJSC, the Abu Dhabi investment firm that last month took a 9.1 percent stake in Mercedes-Benz parent Daimler AG. Aabar is now the German automaker's largest shareholder. IPIC also has made numerous investments on its own behalf, primarily in the oil and chemical industries. The company last month became the second largest shareholder in Spanish oil company Cepsa after buying a 37.5 percent stake. It recently spent about $500 million to acquire Nova Chemicals Corp., Canada's largest plastics producer, and has agreed to buy 70 percent of German industrial services company MAN Ferrostaal AG. IPIC is chaired by Sheik Mansour bin Zayed Al Nahyan, a prominent member of Abu Dhabi's ruling family, which controls the UAE presidency. He led last year's takeover of English football team Manchester City and joined Qatari investors in pumping billions of dollars into British bank Barclays PLC. IPIC's decision to acquire ratings follows a similar move by another Abu Dhabi investment arm, Mubadala Development Corp. Mubadala late last week issued its first annual report, a move almost unheard of among Gulf state-owned funds.
Both companies have taken on billions of dollars in debt to fuel their growth in recent years, some of which soon needs to be refinanced. That sets them apart from the secretive and far larger Abu Dhabi Investment Authority, which likens itself to a pension fund and is not understood to seek out external sources of funding. A spokesman declined to comment on whether ADIA, believed to be the world's biggest sovereign wealth fund, would seek its own credit ratings. Rachel Ziemba, an analyst at RGE Monitor who tracks sovereign funds, said Abu Dhabi's decision to open some of its books to credit agencies should erase part of the "significant transparency deficit" surrounding its investments. It also sends a signal that the funds are eager to keep spending and willing to borrow to increase their buying power. "This allows them to keep making investments on the international capital markets without needing to sell some of their more liquid assets," Ziemba said. Fitch Ratings and Standard & Poor's Ratings Services each rated IPIC "AA" over the long term. Moody's Investors Service gave the company a similar rating of "Aa2." The outlook for each is stable.