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Moody's downgrades Ezdan ratings

Moody's Investors Service Ltd. downgraded the corporate family rating of Ezdan Holding Group to B1 from Ba1 and changed the company's outlook to stable from ratings under review.

The senior unsecured medium-term note and the associated senior unsecured debt instrument ratings of the diversified real estate developer's subsidiary, Ezdan Sukuk Co. Ltd., were also downgraded to (P)B1 from (P)Ba1 and B1 from Ba1, respectively.

According to the rating agency, the downgrade to B1 mirrors its belief that Ezdan's financial position will remain weak over the next 12 to 18 months and it will be displayed through the Qatar-based developer's weak credit metrics, in which leverage and interest cover will stay above 10.0x and trending below 2.0x, respectively.

The downgrade also reflects the change in financial policies that resulted from swapping a part of its equity portfolio to boost its stake in a property project as opposed to Moody's original expectations.

Meanwhile, Moody's is attributing the stable outlook to its expectations that Ezdan will be able to execute on its refinancing plan, which would lessen some pressure on covenants.