Abu Dhabi National Energy Company (Taqa) Wednesday said it had severed ties with the ratings agency Standard & Poor's (S&P) because of changes in the way the agency evaluates the creditworthiness of government-related companies.
The change led S&P to put Taqa and Nakilat, a gas shipping company based in Qatar, on watch for possible ratings downgrades.
Taqa, which is majority-owned by the Abu Dhabi Government and has 27.95 per cent of its shares listed on the Abu Dhabi Securities Exchange, still holds an "Aa2" rating from Moody's Investor Services, one of the agency's strongest marks.
Ratings affect the ease with which firms can borrow money and sell equity in the stock markets. Companies with high ratings are seen by banks and investors as less risky, leading to lower interest rates when they want to borrow and more interest in their stock.
"Following our review of the new methodology published by S&P on June 30, we do not believe these criteria will result in a rating that will accurately reflect the creditworthiness of Taqa," Peter Barker-Homek, Taqa's chief executive, said. "The underlying fundamentals of our business have not changed."
S&P changed its ratings methods this week for government-related entities (GRE), or companies that have strong government links and can expect sovereign support in dire circumstances, such as a loan default.
According to an S&P report, the new method puts stronger emphasis on stand-alone credit ratings, or the ratings GREs would receive without any assumption of government support.
"Overall, we estimate that between 10 per cent and 20 per cent of rated GREs are likely to be affected by the revised criteria," the S&P report said.
"We expect the effect to be positive or negative depending on the individual situation of each GRE, and to be generally within one or two notches from the current rating."
S&P had previously evaluated government support largely on a case-by-case basis, giving companies ratings that fell between their stand-alone ratings and those of the government.
The new method, Taqa said, did not take into account the fact that the company still enjoyed firm support from the Government. S&P confirmed Taqa's rating in May, and the Government's sovereign ratings have not moved since then.
"Taqa has not changed but S&P has," the company said.
Farouk Soussa, head of government ratings at S&P in Dubai, said: "We have carried out a review of all GREs in the GCC region to determine the likely impact of our updated methodology on the ratings.
"This review indicated that two entities were affected, which we placed on credit watch pending a full review of the likelihood of government support.
"The credit watch indicates that there was a risk of downgrade, but this is not a foregone conclusion and depends on the outcome of our review. No other GREs in the GCC region are affected."
The change comes amid several downgrades of Gulf companies by S&P and other major ratings agencies.
S&P yesterday downgraded Oman United Insurance to "BBB minus", its lowest investment-grade rating. On Tuesday, S&P gave Kuwait Projects a negative ratings outlook.
Also on Tuesday, the agency downgraded the ratings of three Dubai government-linked companies - DP World, Jebel Ali Free Zone, and Dubai Multi Commodities Centre Authority - while affirming the ratings of DIFC Investments.
A few companies in the GCC have had their ratings lowered in the past year, but with most of them it was because they defaulted on loans, leading agencies to give them the lowest ratings.
Global Investment House, a Kuwaiti investment firm, in April dropped its rating after it failed to make payments on loans.
@Email:afitch@thenational.ae
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
The specs: 2019 Haval H6
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Engine: 2.0-litre turbocharged four-cylinder
Transmission: Seven-speed automatic
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Torque: 315Nm @ 2,000rpm
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The specs: 2018 Opel Mokka X
Price, as tested: Dh84,000
Engine: 1.4L, four-cylinder turbo
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if you go
City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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