Emaar Properties PJSC and Emaar Malls were upgraded from BB+ to BBB- by S&P. It reported a record high presales revenue of AED 27.4bn ($7.5bn) in 2021 and continues to have a strong outlook for 2022-2023, with international revenue expected to climb at double-digit rates. This is a result of a swiftly recovering residential real estate market post Covid, with population growth expected to grow at about 2%, supported by various government measures. Due to the boost in demand, the Emaar units were able to benefit from higher prices and anticipate rising profitability. In addition, S&P noted that Emaar was able to limit the impact of increasing costs and inflation due to their advantageous ‘outsourcing terms that were fixed’. S&P’s upgrade of Emaar’s credit ratings also stem from its debt reduction efforts in the past year, where they repaid about AED 5.8bn ($1.6bn) of gross debt. This far exceeded S&P’s expectations of Emaar and is an outcome of strong operating cashflows in the previous year. Consequently, S&P believes that “the company will sustain stronger credit metrics in 2022-2023 on the back of the market rebound and debt reduction efforts completed in 2021, which we expect to continue”. The rating agency stated that the ratio of Emaar’s funds from operations (FFO) to debt would remain above 45% and debt to adjusted EBITDA is unlikely to exceed 2x, adding to the positives.

Emaar’s dollar sukuk were stable with its 3.7% 2031s up 0.2 points to 94.91, yielding 4.39%.

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