The Arab Energy Fund’s credit rating upgraded to ‘AA+’ by Fitch

The Arab Energy Fund’s credit rating upgraded to ‘AA+’ by Fitch

• Rating underscores TAEF’s strong liquidity and risk profiles
• Fitch notes TAEF’s sustained high profitability and diversification of banking portfolio  

Riyadh, Saudi Arabia- July 29, 2024: The Arab Energy Fund “TAEF” (formerly APICORP), a multilateral impact fund focused on the MENA energy sector, announces that Fitch Ratings has upgraded its credit rating as a Long-Term Issuer Default Rating (IDR) to ‘AA+’ with a ‘Stable Outlook.’

TAEF’s Global Medium-Term Note program, debt issues and its Sukuk Limited program was also upgraded to ‘AA+’.

Fitch’s report noted that the upgrade comes on the strength of TAEF’s strong credit profile based on an improvement in its risk profile, reflecting a prudent approach to managing risk. This approach has allowed the Institution to expand its banking portfolio while still ensuring high asset quality and strong loan performance. This is coupled with the Institution’s unchanged liquidity assessment at ‘AA+.’ 

The ‘Stable Outlook’ reflects TAEF’s steady improvement in key solvency and liquidity metrics over recent years. This includes a sustained low non-performing loan rate and a more diversified banking portfolio, with the oil and gas sector accounting for 33% of all loans at the end of 2023, down from 45% in 2020-2022.

Commenting on the announcement, Mehdi Z. Rizvi, Chief Risk Officer at TAEF, said: “Fitch Ratings’ decision to upgrade our credit rating to ‘AA+’ reflects TAEF’s world-class risk management practices which are aligned with our mandate to enable a secure and sustainable energy future for the region.”

Fitch also noted TAEF’s strong liquidity based on the high credit quality of its treasury assets and ‘excellent’ liquidity buffer, as well as its ‘excellent’ risk management policies and capitalization and ‘very low’ overall credit risk. Also considered in the assessment is TAEF’s sustained high profitability, with a five-year average return on equity of 5.1% and a record net income of USD 225mn in 2023, a 51% year-on-year increase.

TAEF is also rated ‘Aa2’ by Moody’s and ‘AA-‘ by S&P.

Read the full Fitch report here.