The lender’s track record of strong development-related asset performance—reflected in a substantial reduction of the non-performing assets (NPA) during the past three years—is a key factor in the upgrade.
Monday 14, October 2019
Moody’s has upgraded Arab Petroleum Investments Corporation’s (APICORP) long-term issuer and senior unsecured rating to Aa2 and changed the company’s outlook to stable from positive.
The rating agency stated that the stable outlook reflects its view that the APICORP's creditworthiness will be supported by moderate leverage, high-quality development-related assets as well as further improvements in liquidity metrics and access to callable capital which underlines its shareholder support.
The key drivers for the upgrade include steady improvement that the corporation, a multilateral development bank owned by the member states of the Organisation of Arab Petroleum Exporting Countries (OAPEC), has made in its liquidity and funding profile by diversifying its funding sources, said Moody’s.
The bank’s liquidity and funding allow APICORP to reduce its reliance on short-term wholesale deposits and eliminate short-term asset-liability mismatches.
Moody’s expects the higher quality of funding and very strong asset performance to stay.
However, Moody’s said that the bank remains exposed to the risks stemming from the regional geopolitical tensions and the pressures posed by the moderate oil price environment in a number of countries where APICORP operates.