Moody's affirms Mubadala GE Capital’s ‘Baa2’ rating; outlook negative

Moody's Investors Service has affirmed the “Baa2” long-term issuer and debt ratings on the Abu Dhabi-based Mubadala GE capital Ltd (MGEC), a joint venture between Mubadala Development Co. and General Electric Capital Corp., while its outlook was viewed as “negative”.

This rating comes after MGEC's recent announcement on its intention to sell all its assets, as well as those belonging to its subsidiaries to MidCap Finco Ltd (MidCap). A total of $3.6 billion in assets is expected to be sold, which Moody’s described in its recent report as “sufficient to repay all of MGEC's outstanding debt and other liabilities before the company winds down all its activities.”

The negative outlook reflects the potential execution risks that remain until the sale is completed.

“MGEC's asset performance remained strong this year with a stable ratio of problem loans at 1.5 percent as of June 2015, proving risk management framework continues to support asset quality,” the report said. “MGEC also continues to benefit from high capital buffers, with a risk-weighted capital ratio of 20 percent as of June 2015, and robust liquidity,” it added.

An improvement on MGEC’s credit rating in the future would likely be limited, due to its current negative outlook and ongoing sale and exit process, the report added. On the other hand, downward pressure may be seen if the sale for any reason does not go through, or lacks shareholder support.