S&P assigns B+ to Ittihad, sukuk

S&P said it preliminarily assigned B+ ratings to Ittihad International Investment LLC and the planned benchmark-size sukuk it plans to sell. The outlook is stable.

“Through its diversified portfolio across the printing and writing paper, tissue paper, metal converting and building materials industries, as well as business and environmental services, among other activities, Emirati conglomerate Ittihad International Investment (Ittihad) recorded sales of UAE dirham (AED) 11 billion and S&P Global Ratings-adjusted EBITDA of AED 506 million in 2022.

“We consider Ittihad's end-market diversification, favorable cost-positioning in its paper operations, logistic advantages, and highly liquid copper inventories as supportive of the rating. We view the commoditized nature of some of the group's products, the limited size of its stand-alone operations, and the geographic concentration of its assets as offsetting factors,” S&P said in a press release.

The agency noted in 2023, it forecasts adjusted debt to EBITDA of about 7.5x for the company, up from 6.5x in 2022, and projects negative free cash flow for 2023 and 2024 before rebounding in 2025.

Ittihad plans to use the proceeds to refinance debt, which means S&P considers it “broadly leverage neutral.”

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