S&P gives Mohammed Al Ali B+

S&P said it preliminarily assigned a B+ issuer and ksaBB national rating to Mohammed Al Ali Al Swailem Trading & Contracting Co. (Masco). The outlook is stable.

“We assigned our preliminary B+ issuer credit rating to Masco pending the successful issuance of its inaugural sukuk. Our preliminary rating reflects our expectation that Masco will use net proceeds from its Saudi Arabian riyal 600 million, three-year, unsecured sukuk issuance–to be proposed under a new SAR 4 billion sukuk program–primarily to refinance about SAR 416 million of short-term debt,” S&P said in a press release.

Masco will use the rest to boost its cash balances for general corporate purposes, including funding of working capital requirements.

However, the agency noted, “Masco's business risk assessment is constrained by its concentrated profile, modest size, and limited business diversification. Our assessment of Masco's business is constrained by its limited scale of operations, with $55 million (SAR 206 million) of EBITDA generated in 2022, and single country concentration.”

The outlook reflects the view Masco can substantially grow its EBITDA over the next 12 months with S&P Global Ratings-adjusted debt to EBITDA expected to decline to below 5x in 2023 and below 4x in 2024.

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