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Increasing Corporate And Infrastructure Sukuk Issuance Could Lift The Gulf's Capital Markets

Primary Credit Analysts: Karim Nassif, Dubai (971) 4-372-7152; karim.nassif@standardandpoors.com Tommy J Trask, Dubai (971) 4-372-7151; tommy.trask@standardandpoors.com Secondary Credit Analysts: Christophe Boulier, London (44) 20-7176-6724; christophe.boulier@standardandpoors.com Alexander Griaznov, Moscow (7) 495-783-4109; alexander.griaznov@standardandpoors.com Oliver Kroemker, Frankfurt (49) 69-33-999-160; oliver.kroemker@standardandpoors.com Simon Redmond, London (44) 20-7176-3683; simon.redmond@standardandpoors.com Sovereign Analyst: Trevor Cullinan, Dubai (971) 4372-7113; trevor.cullinan@standardandpoors.com Research Contributor: Sapna Jagtiani, Dubai (971) 4-372-7122; sapna.jagtiani@standardandpoors.com

Table Of Contents
Industry Credit Outlook Capital Markets May Play A Bigger Role In The Region Residential Real Estate Markets Are Strengthening, But Oversupply Continues To Dampen The Office Segment Telecom Operators Continue To Steer A Steady Course Our Stable To Positive Outlooks On GCC Utilities Incorporate Their Robust Performances And Sovereign Support High Prices Continue To Bolster The GCC Oil And Gas Sector

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Table Of Contents (cont.)


Sovereign Ratings Should Remain Stable In 2014 On the Back Of Ample Hydrocarbon Resources Issuer Review Recent Rating Activity Contact Information Related Criteria And Research

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Industry Credit Outlook
Growth in issue volumes in the Gulf's capital markets in 2014 will likely be steady versus the 2013 rate, although low yields could ultimately push up issuance. Standard & Poor's Ratings Services sees evidence of robust demand for capital market issues in the region so far this year. Low interest rates, generally positive economic fundamentals, the implementation of regulation to support capital markets, mounting demand for Islamic finance, and the continued need for infrastructure investment in Gulf Cooperation Council (GCC; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE) countries should fuel capital market growth, in our opinion. Overview We forecast 5% GDP growth on average in GCC countries in 2014, on sustained high oil prices. Issue volumes in GCC capital markets are likely to stay stable or strengthen slightly this year, depending largely on interest rate developments. We see mounting demand for sukuk issuance in the Gulf, with some governments aiming to establish Islamic finance hubs. The major risks continue to be potential escalation in regional political instability or an unexpected drop in oil prices.

Corporate and infrastructure issuers in the Gulf continue to benefit from sustained positive economic fundamentals and strong appetite from regional and international investors for high credit quality paper. This, along with a liquid banking sector, is underpinning their credit profiles. These aspects, coupled with a pick-up in the Dubai and Abu Dhabi real estate markets have prompted us to take primarily positive rating actions on these issuers since our last report card. Hydrocarbon exporters' economic fundamentals remain strong, on a high Brent oil price at or above $95 per barrel over the next three years and beyond, by our assumptions (see "Standard & Poor's Revises Its Crude Oil and Natural Gas Price Assumptions ," published Nov. 20, 2013, on RatingsDirect). We consequently expect GDP growth to average about 5% in 2014 for the GCC nations (see "Sovereign Risk Indicators," published Dec. 13, 2013). All GCC sovereigns that we rate carry stable outlooks, except for Saudi Arabia with a positive outlook. The average GCC sovereign rating remains firmly in the 'A' category. We believe corporate entities will remain innovative in their funding solutions, as UAE real estate company Majid Al Futtaim Holding LLC's issuance of perpetual hybrid securities last year shows. In the infrastructure space, we believe that UAE-based Ruwais Power Co. PJSC (Shuweihat 2)'s $850 million project financing and the Sadara Chemical

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Company $20 billion joint venture in Saudi Arabia between The Dow Chemical Chemical Company and Saudi Aramco will serve as templates for other power deals that are coming up for refinancing, and other large multi-asset projects for GCC hydrocarbon exporters aiming to diversifying their revenues away from upstream oil and gas. We also anticipate that power and water needs will continue to propel capital market issues at a steady pace by the main government-related national water and electricity utility monopolies. The main risks to this rosy picture continue to be potential escalation in regional political instability or an unexpected fall in oil prices. Fortunately, for GCC corporate and infrastructure entities, these risks are negatively correlated, with any threat to hydrocarbon supply normally resulting in immediate price hikes. What's more, we don't believe that the U.S. shale boom poses any short-term threat to the performance of GCC commodity producers. Over the longer run, however, the impact of U.S. shale on oil prices is less certain (see "What Is The Significance Of The Shale Phenomenon For Gulf Oil And Gas Producers?," published Nov. 18, 2013).

Capital Markets May Play A Bigger Role In The Region


We see impetus for growth in capital markets stemming from: Low interest rates, as a result of very accommodating central bank monetary policies around the world. Continued positive economic fundamentals in the GCC economies. Regulation that supports capital markets, including the implementation of Basel III in Saudi Arabia in early 2013, requiring banks to increase their capital cushions for long-term project and corporate financing. The strengthening demand for Islamic finance, with yields on sukuk at record lows. Continued need for GCC governments to invest in infrastructure, with much of the responsibility for execution placed on corporate and infrastructure companies that we view as government-related entities (GREs). As regards regulation, the UAE has introduced caps on the market exposures of GREs. Given the tightened caps, banks' appetite for new lending to governments and GREs is likely to drop. We expect banks to encourage borrowers that are rated, or could potentially be rated, 'AA-' or higher to issue bonds and sukuk rather than seek traditional loans. Such behavior should be conducive to new issuance on the capital markets (see "Credit FAQ: How The UAE's Lending Caps Affect Domestic Banks, Government Entities, And The Capital Markets," published Jan. 13, 2014). Any substantive fall in oil prices could put pressure on the fiscal positions of some GCC sovereigns that are curbing their significant investment programs, which in turn could also affect issuance in the private and public sectors. In addition, if political turmoil in the region results in the absence of long-term dollar funding, GCC banks could have a tougher time providing long-term financing. This would potentially point to heightened capital market issuance.

There's an upturn in demand for sukuk


The Dubai government, among others, is pushing ahead to create an Islamic finance hub, but also to answer demand from investors seeking debt issues from high-quality counterparties in the Gulf. Measures such as the caps introduced in the UAE on single GRE exposure, as well as ongoing regulation to consider allowing perpetual sukuk to be treated as permanent equity in company and bank balance sheets is spurring new issues of perpetual sukuk.

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Sukuk issuance will likely once again overtake conventional bond issuance in volume terms in the first quarter of this year, repeating performance in the final quarter of 2013. Among our rated companies, Saudi Electric Co. issued a Saudi Arabian riyal (SAR)4 billion sukuk and Dubai Investments Park Development Company LLC (DIP) issued US$300 million in sukuk in first-quarter 2014. In addition, Kuwait Projects Co. (Holding) K.S.C. issued a $500 million bond. All three issues were several times oversubscribed, sending a signal that demand for debt continues to be strong while supply remains tight. Investors' appetite for debt means that even entities rated in the speculative-grade categories--such as DIP and UAE-based Aldar Properties PJSC--are issuing successfully. The pricing of debt issued out of Dubai also suggests that investors are more comfortable about Dubai-based issuers' abilities to refinance upcoming debt maturities, as well as to meet the infrastructure expansion challenge associated with the Dubai Expo 2020 plan. Saudi Electric's decision to issue in local currency would suggest that some issuers, particularly in Saudi Arabia, may look to local markets for competitive pricing. The emergence of sukuk as a funding structure for both speculative-grade and investment-grade issuers leads us to believe that bank lines to these companies may not be as freely available as before. Alternative funding via the capital markets may therefore become an increasingly important part of these entities' funding considerations.

Tapering off of U.S. bond buying is on its way


Capital market issues accelerated in the final three months of 2013 partly on growth in Islamic finance. This uptick followed a weak third quarter when yields rose by about 1% after the U.S. Federal Reserve's tapering announcement in the preceding quarter (see "Record Low Borrowing Costs Are Boosting Gulf Issuers' Credit Quality, But Will They Last?," published 5 April, 2013). We think yields might be reaching a trough. It will be critical, however, to monitor any future changes in borrowing costs through 2014 if the pace of the Fed's tapering is faster than investors currently anticipate. Uncertainty surrounding the impact of the Fed's tapering, rising emerging market vulnerabilities, and the rise in alternative funding via the equity markets (with the introductions of Qatar and UAE into the Morgan Stanley Capital International {MSCI} index in 2013), will likely put a lid on the extent of growth in capital market issuance in 2014. We view positively the nascent corporate government structures in family-owned businesses, which dominate in GCC economies (see "Stronger Corporate Governance Could Unlock Capital Market Access For Gulf Companies," published Nov. 5, 2013). The opening up of GCC markets to privatization and stiffening competition, and the transfer of knowledge from a few national monopoly GREs to the wider private sector will be a major requirement for expanding capital market issuance and the lessening of reliance on a concentration of a few government-related issuers. What's more, the creation of an institutional investment framework, with pension and insurance funds incentivized to invest in long-term infrastructure assets, would also contribute to the deepening of capital markets in the region. We also believe that regulatory changes, especially pension reforms, and the way insurance companies invest excess capital will be key.

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Chart 1

Residential Real Estate Markets Are Strengthening, But Oversupply Continues To Dampen The Office Segment
We see improving performance in GCC residential property markets. Dubai is leading the way with sharp increases in rents and sale prices. The top-tier developers, such as UAE-based Emaar Properties PJSC, are successfully capitalizing on these trends by stepping up the pace of their new off-plan developments. Still, we foresee considerable swings in sale prices in Dubai over the coming two to three years, as the current supply begins to hit the market and we discover the extent of end-user demand. Other GCC markets, which are less affected by foreign investment and speculation, are less likely to experience volatility. Legal and regulatory developments across the region are positive steps, in our view, and likely to promote market confidence, sustainable growth, and market stability over the long term. Moves include mortgage and rent regulation, central bank regulation on banks' property exposures, and developer escrow accounts. We anticipate that supply rather than demand will propel GCC retail property markets--where Emaar, Aldar, and Majid Al Futtaim have high exposure--over the next two years. In Dubai, where supply remains limited and the tourism sector is growing rapidly, prime rents have gone up in recent years and may continue to rise. Rents will likely remain stable in other major markets such as Abu Dhabi and Doha, although they have sizeable supply pipelines.

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The issuers we rate have relatively modest exposures to the office segment, which remains oversupplied in the region's major capital cities, with vacancy rates of 15% and higher. We are witnessing modest improvement for high-quality office buildings in prime areas, as tenants are relocating from secondary locations. The year started on a positive note for the hospitality industry, where Emaar, Aldar, Majid Al Futtaim, and the UAE's Tourism Development and Investment Co. P.J.S.C. (TDIC) are active. Revenue per available room (RevPAR) has increased sharply across the region, despite significant supply additions in Riyadh, Dubai, and Abu Dhabi. The large pipelines of new developments, however, especially in Riyadh and Abu Dhabi, may limit further recovery in RevPAR.

Telecom Operators Continue To Steer A Steady Course


Telecommunications operators' stable performances and prospects reflect growth in the GCC's major markets as a result of fixed-line broadband expansion and adequately managed price declines in mobile telephony. The competitive landscape remains supportive in most GCC markets, and we have even seen prices stabilize in the competitive Bahraini market. We recently lowered our long-term rating on the largest telecom operator in the region, Ooredoo Q.S.C., to 'A-' from 'A' due to our expectation of higher leverage (debt to EBITDA) and lower free operating cash flow in 2014 and 2015. The lower EBITDA we now anticipate for Ooredoo in 2014 is primarily because of the negative impact from the devaluation of emerging market currencies and negative EBITDA from the company's greenfield operation in Myanmar. We are keeping the rating on UAE's largest operator, Emirates Telecommunications Corp. (Etisalat), on CreditWatch with negative implications, as we still have no clarity on whether it will acquire a majority stake in Maroc Telecom. Such a transaction could require substantial debt financing and push up Etisalat's debt to EBITDA.

Our Stable To Positive Outlooks On GCC Utilities Incorporate Their Robust Performances And Sovereign Support
Dubai Electricity and Water Authority (DEWA) and Saudi Electric are performing in line with our expectations. For instance, DEWA reported positive discretionary free cash flows in 2013. Our positive outlook on Saudi Electric largely reflects that on Saudi Arabia. Underpinning their performance is the strong demand for power and water in both markets, population growth, and the limited competition across their vertically integrated power and water models. DEWA had refinanced its 2013 maturities and we don't anticipate any further borrowing requirements in 2014. To date, both entities have issued at compellingly low prices, to a large extent because of their sovereign ownership, but also owing to their strong performances. Abu Dhabi National Energy Co. PJSC's (TAQA) power and water business continues to deliver solid cash flows, which underpins our positive outlook on the company. DEWA, Saudi Electric, and TAQA all face large debt maturities over the next few years, however. We currently believe that they should be able to meet these maturities, in line with our assessment of their liquidity as "adequate, as our

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criteria define the term. The absence of cost-reflective tariffs continues to constrain the stand-alone business risk profiles of many rated GCC utilities. Oman Power and Water Procurement Co. SAOC is the exception. We consider that the company operates under Oman's benign and well-administered cost-reflective mechanism.

Robust oil prices support project finance, while project bonds in the power and water sector in Abu Dhabi could be landmark deals
Our anticipation that oil prices will remain persistently high will likely continue to benefit the Ras Laffan Liquefied Natural Gas Co. Ltd., Ras Laffan Liquefied Natural Gas Co. Ltd. (II), and Ras Laffan Liquefied Natural Gas Co. Ltd. (3) projects (together, RasGas) because liquefied natural gas (LNG) sale contract terms have about 60% of their contracts indexed to crude oil prices. In addition, one of the major repercussions of the current U.S. shale boom is the potential decoupling of gas contracts, making them gas- rather than oil-index based. We see the effect of this shift on our project finance ratings in the GCC as minimal in the short term. Over the next few years, the impact on rated projects would depend on gas price trends, rather than whether or not contracts are linked to oil (see "Do Recent Rulings Herald The Divorce Of Oil And Natural Gas Prices, And Who Will Benefit?," published Feb. 4, 2013). The capital markets in GCC countries received a boost in August 2013 with Ruwais Power's (Shuweihat 2) issue of $825 million in project bonds (maturing in 2033) to help refinance a power and water plant in Abu Dhabi. This has ended a lull in project bond activity in the region since the RasGas and Dolphin transactions of 2007 and 2008, respectively. The significance of Shuweihat 2 is two-fold. First, it represents a landmark transaction for the GCC as the first power and water transaction to be funded in the bond market, and may pave the way for other such transactions to be funded through the capital markets. Second, it's the first GCC project finance transaction that we've analyzed using our GRE methodology. The implementation of the Basel III framework for banks could have a direct impact on the tenors for long-term project financing and reduce the involvement of European financial institutions in long-term lending to the region. Closer to home, SAMA, the central bank of Saudi Arabia, has adopted new regulations affecting financial services firms, and we anticipate that similar controls will be introduced shortly in Kuwait and Qatar. The regulations introduce capital charges for bank lending to projects that previously were not required. We believe any gap left by the banks' potentially diminishing role in project funding in the region may spur the use of capital market funding, including sukuk issues (see "How Project Bonds Could Plug The Potential Gap In GCC Infrastructure Financing," published Oct. 30, 2013). Furthermore, as a result of the caps introduced by the UAE central bank relative to lending to the region's GREs, some project or structured finance vehicles of GREs whose credit quality may be higher than that of their parent may be encouraged to seek ratings and tap the capital markets (see "How The UAE's Lending Caps Affect Domestic Banks, Government Entities, And The Capital Markets," published Jan. 13, 2014). However, the amount of future capital market versus bank financing of projects will hinge largely on the availability of

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liquidity from banks and the pricing of projects via banks versus project bond financings. We consider the current strong capital adequacy ratios and healthy liquidity that characterize the banks in GCC, along with the sensitivity of issuers to pricing of bank versus capital market debt, as a brake on the potential for project finance capital market development. What's more, we note the increasing importance of Asian and U.S. export credit agencies in providing initial funding support to enable execution of large scale project finance financings in the region. For example, the Japanese Bank for International Cooperation played an important role in funding the Shuweihat 2 transaction. Similarly, the U.S. Export-Import Bank financed a substantial portion of the recent Sadara transaction in Saudi Arabia. We understand that U.S. and Asian investors represented about 90% of the investors in Shuweihat 2. That said, we may increasingly see capital market tranches in large transactions with long maturities, in tandem with financing by the Export Credit Agency and banks.

Buoyant commodity prices help transport entities and corporate securitizations amid the exploration of various funding options for broad expansion
Qatar-based Nakilat Inc.'s LNG shipping vessel financing transaction should continue to benefit indirectly from healthy commodity prices. In our view, this will in turn improve the financial health of the key take-or-pay charterers under the transaction, including RasGas. Still, we consider ratings upside on Nakilat to be limited, given the extremely high likelihood of timely and sufficient extraordinary support from the Qatari government for the company that we already factor into its long-term corporate credit and debt ratings. DP World Limited (not rated) handled 55 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals during 2013, with the second half of the year delivering volume growth of 3.6% on the prior period on a like-for-like basis. The company's resilient performance, despite tough market conditions across emerging markets during parts of 2013, reflects in part sound throughput growth year on year in UAE, with the Middle East being its main trading hub. We believe that GCC transportation companies may continue tapping the sukuk market to fund infrastructure development. Recent sukuk issues include the Saudi Civil Aviation's SAR15 billion ($4 billion) second tranche issue in September 2013, to help finance the expansion projects of King Abdulaziz International Airport in Jeddah and King Khaled International Airport in Riyadh. Sukuk and enhanced equipment trust certificates may be increasingly attractive funding tools for GCC entities operating in the airline sector.

High Prices Continue To Bolster The GCC Oil And Gas Sector
Despite current global economic uncertainties and the only mild economic recovery we expect for the eurozone (European Economic and Monetary Union) in 2014, GCC commodities players are operating under favorable conditions. While high oil and gas prices support the upstream industry, access to competitively priced gas mean that Middle Eastern ethylene and petrochemical producers, like Saudi Basic Industries Corp. and Industries Qatar QSC, retain a large competitive advantage over naphtha-based crackers in Europe and Asia. We note, however, that the shale gas boom in the U.S. and the resulting lower position of the U.S. petrochemical industry on the cost curve has

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significantly changed the competitive landscape in ethane production. The incremental North American supply may affect product pricing in key export markets over the next few years or longer. There are several new ethane crackers planned in the U.S., while additional gas allocation in Saudi Arabia remains limited in our view. Shale gas exploration--already underway in Saudi Arabia and Oman--could provide an opportunity to address the region's increasing gas shortage. We view the need to phase out government energy subsidies in the Middle East and North Africa as a key risk in the sector. The International Monetary Fund has estimated these subsidies at approximately $240 billion. Although less pressing for oil exporting countries than for oil importers, we still consider that there's a need for coordinated reform. This will likely result in higher feedstock costs over the coming years for private and government sponsored commodities producers in the region. We have already seen government price hikes for gas supplied to Qatar Fertiliser Company (Q.S.C.C) and Aluminium Bahrain. We think demand growth will lag supply increases for global crude distillation capacity for most of 2014-2016. Substantial capacity increases are planned in the Middle East. We think this will place increased pressure on the European refineries' already low profitability. In particular, several new refinery projects, such as those in Yanbu and Jubail in Saudi Arabia, are targeting the export market and include a high proportion of diesel output. Part of this diesel fuel will likely end up in Europe, assuming that the sizeable refinery additions planned in East Asia--notably China--will satisfy much of the demand growth there. The new Middle Eastern refineries under construction are likely to be more complex, with better cost advantages than most European refineries, and their profitability should be significantly more resilient than that of those in Europe because of their lighter product output and ability to capture higher discounts on heavier and sour crude slates. We believe European refineries will find it increasingly difficult to compete.

Sovereign Ratings Should Remain Stable In 2014 On the Back Of Ample Hydrocarbon Resources
Sovereign ratings in the GCC continue to be high in a global comparison, ranging from 'AA' to 'BBB'. The outlooks on all our GCC sovereign long-term ratings are stable, except for Saudi Arabia, which carries a positive outlook. Economic growth, public finances, and external balance sheets in much of the GCC continue to benefit from the region's significant, though unevenly distributed, hydrocarbon resources. Average annual oil prices remained historically high throughout 2013 and have stayed high so far in 2014. The resulting inflow of funds into these economies and government coffers continues to support strong government spending, not least on a wide range of infrastructure projects including transportation, education, health, housing, and industrial projects. The Emirate of Dubai's (not rated) economy is on an upward trend. While it doesn't benefit directly from significant hydrocarbon resources, it has a diversified economy compared with other countries in the region, with well-developed transport and logistics, hospitability, and trade sectors. This diversity allows the emirate to benefit from global demand for the services it provides, and also from high incomes in neighboring economies. Underdeveloped political and institutional frameworks and limited monetary policy flexibility remain key ratings constraints for GCC sovereigns. There are still specific shortcomings in the effectiveness and predictability of

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policymaking in the GCC, in our view. Weaknesses include the quality of policy debate, the strength and depth of institutions, transparency of decision-making, data monitoring, and reliability of information, legal frameworks and the rule of law, and succession risks. These partly reflect the GCC nation states' relatively short histories and their governments' roles as wealth distributors, creating less urgency for institutional depth. While GCC sovereigns are addressing some aspects of these shortcomings, reform is gradual and no GCC sovereign has attempted significant reform in the past two years. Fixed exchange rate regimes, the lack of independent monetary policy, and shallow domestic bond markets constrain the scope for and transmission of monetary policy. While efforts to develop and deepen domestic bond markets are underway, in Qatar for example, we do not expect monetary policy frameworks and flexibility to change significantly. In Bahrain, we continue to expect stable growth, an absence of further deterioration in its political environment, and the inflow of GCC development funds. We revised our outlook on Saudi Arabia to positive from stable on May 29, 2013. The outlook reflects our view that there is at least a one-in-three chance that we could raise our ratings on Saudi Arabia over the next 18 months if economic growth remains strong, supporting further increases in per capita GDP and income to levels that would qualify for a higher initial economic score, as defined in our criteria.
Chart 2

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Chart 3

Table 1

GCC Sovereigns That Standard & Poor's Rates


Foreign currency long- and short-term ratings and outlook Abu Dhabi (Emirate of) Bahrain (Kingdom of) Kuwait (State of) Oman (Sultanate of) Qatar (State of) Ras Al Khaimah (Emirate of) Saudi Arabia (Kingdom of) Sharjah (Emirate of) Ratings as of March 17, 2014. GCC--Gulf Cooperation Council. AA/Stable/A-1+ BBB/Stable/A-2 AA/Stable/A-1+ A/Stable/A-1 AA/Stable/A-1+ A/Stable/A-1 AA-/Positive/A-1+ A/Stable/A-1

Issuer Review

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Table 2

GCC Issuer Review


Company or transaction Abu Dhabi National Energy Co. PJSC Ajman Sewerage (Private) Co. Ltd. Aldar Properties PJSC Bahrain Mumtalakat Holding Co. Bahrain Telecommunications Co. Dar Al Arkan Real Estate Development Co. Dubai Electricity and Water Authority Dubai Investments Park Development Company LLC Emaar Properties PJSC Emirates Telecommunications Corp. (Etisalat) Industries Qatar QSC International Petroleum Investment Co. Kuwait Projects Co. (Holding) K.S.C. Majid Al Futtaim Holding LLC MB Petroleum Service LLC and MB Holding Co. LLC Millennium Offshore Services Mubadala Development Co. PJSC Nakilat Inc. Nico Middle East Ltd. Oman Power and Water Procurement Co. SAOC Oman Telecommunications Co. Ooredoo Q.S.C. Petrofac Ltd. Qatar Petroleum Ras Laffan Liquefied Natural Gas Co. Ltd. (II) and (3) Ruwais Power Co. PJSC (Shuweihat 2) Saudi Basic Industries Corp. Saudi Electric Co. Saudi Telecom Co. Shelf Drilling Holdings Ltd. Tourism Development and Investment Co. P.J.S.C. Credit rating A/Positive/-BB+/Stable/-BB/Stable/B BBB/Stable/A-2 BB+/Stable/B B+/Positive/-BBB/Stable/-BB/Stable/-BBB-/Stable/-Analyst Karim Nassif Karim Nassif Tommy Trask Trevor Cullinan Country UAE UAE UAE Bahrain

Alexander Griaznov Bahrain Tommy Trask Karim Nassif Tommy Trask Tommy Trask Saudi Arabia UAE UAE UAE

AA-/Watch Neg/A-1+ Alexander Griaznov UAE AA-/Stable/-AA/Stable/A-1+ BBB-/Stable/A-3 BBB/Stable/A-2 B/Negative/-B/Stable/-AA/Stable/A-1+ AA-/Stable/-B/Stable/-A/Stable/-BBB+/Stable/A-2 A-/Stable/A-1 BBB+/Stable/A-2 AA/Stable/-A/Stable/-A-/Stable/-A+/Stable/A-1 AA-/Positive/-A+/Stable/A-1 B+/Stable/-AA/Stable/A-1+ Tommy Trask Trevor Cullinan Tommy Trask Tommy Trask Tommy Trask Tommy Trask Trevor Cullinan Karim Nassif Tommy Trask Karim Nassif Qatar UAE Kuwait UAE Oman UAE UAE UAE UAE Oman

Alexander Griaznov Oman Alexander Griaznov Qatar Simon Redmond Trevor Cullinan Karim Nassif Karim Nassif Oliver Kroemker Karim Nassif UAE Qatar Qatar UAE Saudi Arabia Saudi Arabia

Alexander Griaznov Saudi Arabia Christophe Boulier Trevor Cullinan UAE UAE

*Ratings as of March 17, 2014. GCC--Gulf Cooperation Council.

Recent Rating Activity


Table 3

GCC Issuer Rating Actions*


Company or transaction Emaar Properties PJSC Ooredoo Q.S.C. To BBB-/Stable/-A-/Stable/A-1 From BB/Stable/-A/Negative/A-1 Date Feb. 5, 2014 Feb. 3, 2014

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Table 3

GCC Issuer Rating Actions* (cont.)


Qatar Fertiliser Company (Q.S.C.C) Bahrain Telecommunications Co. Nico Middle East Ltd. Oman Telecommunications Co. Aldar Properties PJSC Shelf Drilling Holdings Ltd. Ruwais Power Co. PJSC (Shuweihat 2) Ajman Sewerage (Private) Co. Ltd. Dubai Investments Park Development Company LLC MB Petroleum Service LLC and MB Holding Co. LLC Saudi Electric Co. Petrofac Ltd. Dar Al Arkan Real Estate Development Co. Abu Dhabi National Energy Co. PJSC Emirates Telecommunications Corp. (Etisalat) NR BB+/Stable/B B/Stable/-BBB+/Stable/A-2 BB/Stable/B B+/Stable/-A-/Stable/-BB+/Stable BB/Stable/-B/Negative/-AA-/Positive/-BBB+/Stable/A-2 B+/Positive/-A/Positive/-AA-/Watch Neg/A-1+ A+/Stable/-BBB-/Stable/A-3 NR NR B+/Positive/B B/Stable/-NR BB/Positive/-NR B/Stable/-AA-/Stable/-NR B+/Stable/-A/Stable/-AA-/Stable/A-1+ Dec. 23, 2013 Dec. 19, 2013 Nov. 11, 2013 Oct. 25, 2013 Oct. 21, 2013 Sept. 23, 2013 Aug. 6, 2013 July 17, 2013 July 8, 2013 June 13, 2013 June 3, 2013 May 17, 2013 May 6, 2013 May 1, 2013 April 26, 2013

*Rating actions since the last report card published March 31, 2013. Preliminary 'A-' rating assigned on June 25, 2013. GCC--Gulf Cooperation Council. NR--Not rated.

Contact Information
Table 4

Contact Information
Name Christophe Boulier Trevor Cullinan Christian Esters Location London Dubai Frankfurt Telephone (44) 207-176-6724 (971) 4-372-7113 (49) 69-33999-242 (7) 495-783-4109 (971) 4-372-7122 E-mail christophe.boulier@standardandpoors.com trevor.cullinan@standardandpoors.com christian.esters@standardandpoors.com alexander.griaznov@standardandpoors.com sapna.jagtiani@standardandpoors.com andreas.kindahl@standardandpoors.com oliver.kroemker@standardandpoors.com karim.nassif@standardandpoors.com karl.nietvelt@standardandpoors.com simon.redmond@standardandpoors.com tommy.trask@standardandpoors.com

Alexander Griaznov Moscow Sapna Jagtiani Andreas Kindahl Oliver Kroemker Karim Nassif Karl Nietvelt Simon Redmond Tommy Trask Dubai

Stockholm (46) 8-440-5907 Frankfurt Dubai Paris London Dubai (49) 69-33999-160 (971) 4-372-7152 (33) 1-4420-6751 (44) 207-176-3683 (971) 4-372-7151

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Increasing Corporate And Infrastructure Sukuk Issuance Could Lift The Gulf's Capital Markets

Related Criteria And Research


Related Criteria
Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 Use Of CreditWatch And Outlooks, Sept. 14, 2009

Related Research
After A Mixed 2013, The Global Sukuk Market Looks Promising In 2014, Feb. 4, 2014 How The UAE's Lending Caps Affect Domestic Banks, Government Entities, And The Capital Markets, Jan. 13, 2014 S&P Sees Solid Corporate And Infrastructure Sukuk Volume In 2014, Nov. 27, 2013 Standard & Poor's Revises Its Crude Oil and Natural Gas Price Assumptions , Nov. 20, 2013 What Is The Significance Of The Shale Phenomenon For Gulf Oil And Gas Producers?, Nov. 18, 2013 Stronger Corporate Governance Could Unlock Capital Market Access For Gulf Companies, Nov. 5, 2013 How Project Bonds Could Plug The Potential Gap In GCC Infrastructure Financing, Oct. 30, 2013 Record Low Borrowing Costs Are Boosting Gulf Issuers' Credit Quality, But Will They Last?, April 5, 2013 Do Recent Rulings Herald The Divorce Of Oil And Natural Gas Prices, And Who Will Benefit?, Feb. 4, 2013
Additional Contacts: Industrial Ratings Europe; Corporate_Admin_London@standardandpoors.com Infrastructure Finance Ratings Europe; InfrastructureEurope@standardandpoors.com

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