Esterad Investment ratings lowered

The outlook for the ratings is Stable.

The rating action underscores the significant challenges the Company faces with respect to restoring profitability to the levels seen prior to 2008 together with the possibility for further asset write downs in the current operating environment.

Exceptionally difficult regional and global financial markets in the latter part of 2008 pushed Esterad to record its first loss since inception.

The current economic slowdown in the Gulf region is creating a difficult operating environment and at the same time credit risk in the broader Gulf Cooperation Council (GCC) market has increased.

Esterad's profitability was impacted by realised losses related largely to the quoted equity portfolio and comprised fair value losses and realised losses from sale of securities. Unrealised losses were across all asset classes and most geographies reflecting severely stressed global financial markets.

Although the asset base is reasonably diversified by asset class there continues to be geographic concentration mainly to the GCC market. This reflects the Company's chosen investment strategy.

Esterad's balance sheet is supported by a solid capital base funding more than two-thirds of total assets. Importantly leverage remains low and in fact improved slightly in the year under review as a result of short-term debt repayment. Liquidity remains comfortable reflecting a sizeable pool of unencumbered marketable securities and a strong cash balance.