Moody's Investors Service has upgraded the issuer rating of Aldar Properties, one of Abu Dhabi's leading real estate companies, to Baa2 from Baa3 with a stable outlook on all ratings.

Concurrently, Moody's upgraded to Baa2 from Baa3 the rating of the $750 million senior unsecured Trust Certificates due in 2018 and issued by Sukuk Funding (No 3) Limited.

Today's upgrade reflects Aldar's healthy credit metrics, which Moody's believes will remain relatively resilient in the current weak operating environment in Abu Dhabi, said a statement from Moody's.

As of the last 12 months ending on 30 Sept 2016, Aldar's gross debt to ebitda as adjusted by Moody's stood at 2.6x (net leverage of 0.7x) and ebitda interest coverage reached 11.2x. Earnings in Q3 2016 were slightly boosted by Dh900 million ($244 million) one-off Al Raha Beach land sale to the government of Abu Dhabi, said the ratings agency.

Nevertheless, Moody's base case forecast suggests that Aldar's credit metrics will remain strong over the coming 12-18 months with gross leverage staying below 3.0x and ebitda interest coverage staying well above 8.0x.

"Our decision to upgrade Aldar's ratings reflects its deleveraged balance sheet, improved earnings quality and our view that it will be able to withstand ongoing weakness in the Abu Dhabi real estate market," explained Rehan Akbar, a Moody's assistant vice president (analyst).

In addition, Aldar's management has in the past few quarters taken several positive steps that provide clarity to Moody's on how the company will be financially and strategically managed going forward, said Akbar.

This includes executing on its Dh3 billion ($816 million) investment plan to grow its recurring income portfolio, formalising a relatively clear dividend policy and prudently extending its debt maturity profile, she added.-TradeArabia News Service