S&P downgrades KIPCO

[khurramdar]

S&P downgrades KIPCO
Written by Chris Forrester
Sunday, 14 February 2010 11:13
Kipco, Kuwait’s largest investment operation, has suffered a major downgrade. Kipco backs Orbit-Showtime, a Middle East pay-TV operator, and is described as having a “weak average asset quality”. Standard & Poors has put the firm on ‘credit watch’ and this has negative implications for the company.

S&P, in a note to investors, said: “The ratings are currently constrained by what we see as Kipco's high asset concentration, the low liquidity of its listed investments, and relatively weak average asset quality.” Kipco is in many respects a sovereign fund, given that 54% of the company is held by Al Futtooh Holdings, a company linked to Kuwait’s ruling Al Sabah family.

Kipco’s two largest investments are in Bahrain-based United Gulf Bank, and Dubai-based Orbit-Showtime. Together the two investments represent some 70% of the company’s portfolio, which S&P says is relatively high. Such a concentration of investment weighs negatively on the company’s credit profile says S&P.

"Although we currently consider Kipco's link to the ruling family of Kuwait to be 'strong', the company's role within the state is currently deemed to be of 'limited importance' because of its non-public nature, according to our criteria on government-related entities," the rating agency said.

Kipco’s shares fell 1% on Thursday.

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