Saad Group and related entities outlook revised to stable on improved capital structure

At the same time, the 'BBB+' long-term corporate credit ratings were affirmed.

"The outlook revision reflects the reduction of Saad Group's debt levels to 27% of adjusted asset value from 34% when the negative outlook was assigned back in August 2007," said Standard & Poor's credit analyst Mohammed Fayek.

The improvement in Saad Group's capital structure is attributable to the substantial equity injections from the group's main shareholder, a move that demonstrates his commitment to the group.

The group used the equity injections and new debt issues primarily to acquire equities in global financial institutions as well as other regional investments. Standard & Poor's recognizes the credit strength of the new investments and their contribution toward improving liquidity and geographic diversity, all of which supported group performance during the recent global equity market downturns in the second half of 2007. The concentration of risk in the financial sector, however, remains high and the adverse impact of weakening financial markets continues to be a concern.

"Standard & Poor's expects that the Saad Group will maintain a net debt to adjusted portfolio value of less than 30% and balance its growth plans in real-estate development and manufacturing activities to maintain intermediate leverage," Mr. Fayek added.

The stable outlook also factors in the expected continued support from the group's main shareholder.

The potential for a rating upgrade is constrained by leverage and the potential for volatility in portfolio value. A sustained weakening of equity markets or a more aggressive growth strategy and subsequently higher leverage for the group could have negative implications for the rating.