S&P reaffirms its ‘AA’ rating for Dhaman with stable outlook
Standard & Poor’s Rating Services, one of the world’s leading rating agencies, under its revised criteria for multilateral lending institutions (MLIs) and other Supranationals, reaffirmed its “AA” rating on Dhaman and continued Stable Outlook, reflecting its very strong business profile and strong financial profile.
The Arab Investment and Export Credit Guarantee Corporation (Dhaman) is an autonomous Arab multilateral organization, established and based in Kuwait since 1974; it encompasses in its membership all Arab states and a number of Arab international organizations. It serves as an export credit agency for the Arab region, supporting FDI’s into and trade with Arab states.
Dhaman’s Director-General, Fahad AlIbrahim announced “Dhaman maintained its high ratings at “AA” with Stable Outlook for the tenth consecutive year. We continue to witness material growth in our investment guarantee and export credit insurance business volumes backed by solid financial position, despite the prevailing political uncertainties and economic challenges in many countries within the Arab World, being the primary geographical focus of Dhaman’s operations.”
The S&P stated in its press release dated 29th March 2017 that their ratings on Dhaman continue to be based on their view of the agency’s very strong business profile and strong financial profile. They added “Our assessment of Dhaman’s standalone credit profile (SACP) is ‘aa’. We incorporate no uplift from extraordinary shareholder support into our ‘AA’ ratings on Dhaman, since the capital base is currently fully subscribed and in the process of being paid-up”. “The stable outlook reflects our expectation that Dhaman will meet its growth targets while maintaining strong financials as it meets its primary goal of helping service economic growth across the Arab region”.
The Rating Agency revealed: We base our assessment of Dhaman’s very strong business profile on its public policy importance and governance and management expertise Although Dhaman’s net profitability declined in 2016, its business volume increased materially, which we view as supportive of the institution’s role. The 2016 business volumes reached levels last seen during the Arab Spring in 2011 Despite the continued high operating risks in a number of member countries, we note that Dhaman’s membership has remained stable and supportive Dhaman has a history of preferred creditor treatment by member states on its noncommercial risks and we expect this to continue. We expect business volumes in the region to increase over the medium term. In our opinion, the evolution of Dhaman’s role over this period could be a key indicator of its importance. Dhaman’s risk-based capital adequacy is very strong. We expect Dhaman will maintain extremely strong capitalization while insured commitments increase as it meets its primary goal of helping service economic growth across the Arab region. Liquidity will continue to be exceptional.
Al-Ibrahim concluded that management of Dhaman did not view the uncertainties and challenges in the Arab World as obstacles to achieving its objectives, rather as opportunities to avail its intended role and ultimate mission in supporting the social & economic development of these member states, through continued provision of its investment guarantee and exports credit insurance services. With prudent controls and well-imbedded risk management tools, we adopt well-designed, wellmitigated risk underwriting policies and enjoy a depth of knowledge and professional expertise in the markets and business field in which we operate. We continue to disseminate knowledge and awareness of our services, and do hope to expand further our business scope and operational capacity.