Fitch Ratings has assigned the Bahrain-based diversified investment holding company, Mumtalakat Holding, a long-term foreign currency Issuer Default Rating (IDR) of 'A' with a stable outlook.

Fitch has also assigned Mumtalakat senior unsecured ratings of 'A' and a Short-term IDR of 'F1'.

In line with Fitch's 'Parent and Subsidiary Rating Linkage' methodology, Mumtalakat's ratings are aligned with the Kingdom of Bahrain's ('A'/Stable/'F1'), reflecting the strong relationship between the two.

Mumtalakat is 100 per cent-owned by the Government of Bahrain and is the government investment arm. It was established as an independent holding company for the Government of Bahrain's non-oil and gas assets in June 2006.

Mumtalakat is an active investor in diverse business and industry sectors in over 35 commercial enterprises, nationally and internationally. Bahrain is in the process of diversifying its economy away from the hydrocarbon sector towards the production of high value-added goods and services and Mumtalakat was established by the government to help drive this transformation.

Mumtalakat has been receiving government equity shares in state-owned enterprises, funds and free land, to manage and operate its subsidiaries. Although government support falls short of an explicit debt guarantee, Fitch considers that Mumtalakat's high profile and strategic role mean that support would be provided if required.

The viability of Mumtalakat's business model is dependent on continued strong linkages with the sovereign and its strategic importance in being the holding company for the government's non-oil and gas assets and, at the same time, not being highly leveraged relative to Bahrain's Long-term 'A' rating.

Fitch notes that Gulf Air's current restructuring is a major financial burden on Mumtalakat, given the latter's material liquidity assistance thus far to the airline, of approximately $450 million in 2008 and $525 million in 2009. However, Fitch expects that this financial burden will be assumed directly by the government in 2010 and 2011.

A change in Bahrain's ratings would result in a change of Mumtalakat's ratings. Any change in the implied support of, commitment from, and ownership by the Government of Bahrain could  have negative rating implications for Mumtalakat. In addition, raising substantial debt on behalf of the subsidiaries or further guaranteeing subsidiaries' debt by Mumtalakat would be a negative credit factor.

Mumtalakat considers itself to be a long-term investor that aims to continuously focus on portfolio diversification whilst keeping a controlling share in key strategic entities.-TradeArabia News Service