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Mon 2 Mar 2009 02:42 PM

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Moody's sees stable outlook for tourism entity

Agency assigns ratings for Abu Dhabi's tourism development and investment company.

Moody's on Monday assigned long-term local and foreign currency issuer ratings to the Tourism Development and Investment Company (TDIC) for the first time.

In addition, the ratings agency said the TDIC's outlook was stable.

The company, which was established in 2005 as a corporate entity of the Abu Dhabi government, is currently developing around 60 residential, hospitality and cultural projects with an expected total cost of AED100 billion ($27 billion).

In order to carry out its mandate to deliver a tourism strategy for the UAE, Moody's said there will be significant funding requirements which are expected to be largely met by third-party debt, land sales and ongoing government subsidies and funding.

Leverage is expected to peak in 2010, but should subside thereafter, Moody's added, when developed residential units will be sold.

"The Aa2 rating takes into account the benefits TDIC derives from its very close links to the government of Abu Dhabi," said Martin Kohlhase, a Moody's Dubai-based assistant vice president and lead analyst for TDIC.

He added: "The underlying business will rely on ongoing government subsidies and funding as well as third party external debt instruments to meet its funding gap.

"The high support firmly expects that the government will meet any exceptional requirements should TDIC not be able to secure funding needs from financial markets."

The outlook is stable and assumes no changes in ownership structure, public mandate or government support and that the company adheres to its financial target of debt to equity not exceeding 100 percent, Moody's added.

Headquartered in Abu Dhabi, TDIC's area of development is Abu Dhabi City which comprises TDIC's largest project, Saadiyat Island.

In the fiscal year of 2007, TDIC recorded AED35 million in revenues and reported a profit of AED65.5 million.

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