KUWAIT - Kuwait Projects Company (Holding) K.S.C.P. (KIPCO), the guarantor for Kuwait Projects Co SPC Limited, has been subject to a ratings downgrade by Moody's (NYSE:) Investors Service. The credit rating agency has lowered KIPCO's Corporate Family Rating (CFR) to B1 from Ba3 and its Probability of Default Rating (PDR) to B1-PD from Ba3-PD. Additionally, Moody's downgraded the provisional ratings of the backed senior unsecured $3 billion Euro Medium Term Note (EMTN) program issued by Kuwait Projects Co SPC Limited to (P)B1 from (P)Ba3. The ratings on the backed senior unsecured bonds due in 2026 and 2027 have also been reduced to B1 from Ba3. However, the (P)NP backed other short-term rating was affirmed. The outlook for all ratings is negative.

Moody's justifies the downgrade with its projection that KIPCO's market value leverage ( MVL (NS:)) will remain above 45% for 2024 and 2025, exceeding initial expectations. The agency foresees that funds from operations (FFO) interest coverage will stay weak at 0.8 times in 2024, with a slight improvement to around 1 times in 2025. Despite KIPCO's adequate liquidity for the coming year, concerns arise from significant bond maturities of $500 million each in October 2026 and February 2027. While Moody's anticipates that KIPCO will secure financing to address these maturities in advance, any delays could substantially weaken the company's liquidity.

The B1 CFR rating continues to reflect KIP...