Fitch assigns GGICO's $600m EMTN programme final 'BBB' rating

The final rating follows a review of the final terms and conditions conforming to information already received when Fitch assigned the expected 'BBB' rating on 3 June 2008. No notes have yet been issued under the EMTN programme.

Approximately 50% of future EMTN proceeds will be used to refinance existing bilateral debt and the other 50% will be reinvested in new projects, in line with GGICO's existing strategy. The refinancing of GGICO's debt is expected to reduce the level of short-term debt and thus enhance the company's liquidity profile, consistent with Fitch's expectations.

Fitch also notes that the documentation provides some protection to senior noteholders through the inclusion of change-of-control and cross-default clauses. Specifically, in the event of a change of control relating to the issuer that subsequently leads directly to a rating downgrade within a specified time period, the noteholders have the right to require the issuer to prepay their notes.

Any senior notes under the programme will be issued at the parent company level (GGICO) and rank equally with all other senior unsecured debt of GGICO. However, Fitch notes that the issuer's debt structure currently contains secured debt of Dhs748m, (or 29% of the group's gross debt, as of FYE07), raised mainly at the parent company level. Nevertheless, Fitch expects the majority of the group's future debt will be unsecured and will continue to be raised at the parent company level.

The documentation also contains balance sheet-based financial covenants and a negative pledge clause, although this negative pledge appears to contain specific carve-outs that would allow secured debt to be raised at the subsidiary level and/or debt to be secured against real estate assets (at either the parent or subsidiary level). Nevertheless, Fitch expects GGICO's unencumbered asset coverage to remain sufficiently high to not present any significant problems of structural subordination for the company's senior unsecured creditors.