GFH Financial Group (GFH), the Bahrain based Islamic financial group, said it has received a long-term Issuer Default Rating (IDR) at 'B-' with a stable outlook from international credit rating agency Fitch.

Fitch has primarily taken into account GFH's success in raising capital in 2014, its improved funding and liquidity profile and the progress it has made so far in building a profitable and cash flow generative business. The Bahraini group's short-term IDR was affirmed at 'B'.

Fitch noted that although GFH’s balance sheet still has high single name and sector concentration primarily in legacy real estate projects, the company is planning to complete these real estate projects and either sell them (profitably) or retain them as an income-producing asset.

However the rating agency also said that completion and eventual exit of these real estate projects might take many years.

In affirming the ratings, Fitch has placed considerable weightage on the fact that GFH's liquidity, leverage and funding profile have stabilised providing flexibility to work out legacy asset exposures, although it also noted that the Bahraini firm's capacity for continued operation is vulnerable to deterioration in the overall business and economic environment.

Factors constraining the rating include profitability that remains weak and volatile and is unlikely to improve materially and sustainably until significant balance sheet and business model reshaping has taken.

Commenting on the rating, CEO Hisham Al Rayes, said: "The affirmation of the rating by Fitch, a leading international credit rating agency, is further recognition by the market of GFH group’s solid foundations and steady performance and progress."

"We have taken significant steps to strengthen our balance sheet as well as our leverage and liquidity profile. We are also actively working to improve and drive greater cash flow generation from across our existing assets and business lines," he noted.
 
Al Rayes said this was an important focus for the group and one that would ensure the further strengthening of its financial and operational position and also contribute towards future upside to its ratings.

"At the same time we also continue to pursue promising new investments and opportunities that are income yielding and can help to generate steady streams of income for the Group, our investors and shareholders," he added.-TradeArabia News Service