Moody's rates Emirates Aluminium bonds A3

Moody's Investors Service said it assigned a prospective A3 long-term rating to the up to $2 billion of senior secured bullet bonds to be issued by Emirates Aluminium Co. Ltd.

The outlook is stable.

The company plans to issue roughly $1 billion of series A senior secured bonds due 2038, about $1 billion of series B senior secured bonds due 2028 and possibility pound sterling-denominated series C senior secured bonds due 2028. In addition to the prospective bonds, Emirates Aluminium has a $1.8 billion subordinated amortizing bank debt facility due 2023.

The agency said the ratings reflect Emirates Aluminium's ownership structure, the strategic importance of its activities to the Emirate of Dubai, the fundamental strength of the aluminum industry and the positioning of the company in the lowest quartile of the cost curve by the lenders' independent aluminum market consultant.

The ratings also reflect the terms of the company's construction contract, through which cost-overrun risk is taken by Emirates Aluminium and not by the sub-contractor; commodity risk, which exposes the company to both commodity input and commodity output price risk; the hybrid nature of the financing terms, which allow Emirates Aluminium to expand into other businesses as long as it is related to aluminum; and refinancing risk, Moody's said.

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