Moody's changes outlook on APICORP to positive, affirms Aa3 rating

Moody's Investors Service has changed its outlook on Arab Petroleum Investments Corporation (APICORP) to positive from stable and affirmed APICORP's long-term issuer and senior unsecured rating at Aa3, it said in a statement on Friday.

The key driver of the outlook change reflects APICORP’s progress in “reducing balance sheet maturity mismatches and its reliance on wholesale deposits in its funding mix by diversifying and lengthening its funding profile,” Moody’s said.

APICORP is a multilateral development bank (MDB) owned by the member states of the Organization of Arab Petroleum Exporting Countries (OAPEC).

The Aa3 rating remains supported by very high capital adequacy, improving asset quality, and very high strength of member support.

“While robust and improving, APICORP's liquidity position nevertheless continues to be constrained by the less liquid nature of some of its treasury investment assets and their exposure to borrower risk,” the statement said.

Meanwhile, its high concentration of operational assets in the oil and gas sector and in the Arab region presents potential challenges should oil prices remain low over a protracted period of time and/or APICORP's borrowers and shareholders face economic, geopolitical and security challenges.