KIPCO Holding Company KIPCO said that credit rating agency Moody's has downgraded the company's rating from Ba1 to Ba2; With a negative outlook.
The company said in a statement to the Kuwait Stock Exchange, today, Sunday, that the classification procedures reflect the view that despite the company's recently announced capital increase, the proportion of Debt to market value of KIPCO investments will remain higher than what is required for valuation (Ba1).
The rating also reflects the company's continued low cash and poor interest coverage ratio with a significant decline in dividend income in 2021.
KIPCO's Ba2 rating continues to reflect the group's portfolio of companies with a strong presence in the MENA region's financial and crypto-paid satellite services sector. .
The previous classification also reflects a historical record of maintaining strong liquidity, despite its recent decline, and amounting to $589 million in cash at the parent company level as at the end of June 2021. and the tendency to actively fund debt maturities to mitigate refinancing risks, as well as the shareholders' connection to the ruling family of Kuwait.
The negative outlook reflects Moody's view that the ratings are in a weak position in their class due to increased borrowing and very low interest coverage.
The negative outlook also reflects the difficult work environment and challenges KEPCO will face over the next 12-18 months.
KIPCO's profits fell 65% in the first half of this year; To reach 3.197 million dinars, compared to profits of 9.219 million dinars for the same period in 2020.
