Abu Dhabi's affirmation of projects is credit-positive for TDIC

Decision of the Executive Council of Abu Dhabi to affirm projects in the emirate are credit positive for government-owned Tourism Development & Investment Company (TDIC), Moody’s Investors said in a statement on Tuesday.

Abu Dhabi last week affirmed a number of projects under the umbrella of the emirate's Strategic Plan 2030. Among the projects are those of the TDIC, rated A1/stable. The announcement was made in conjunction with the announcement of a wider spending review that the Executive Council had initiated for public projects in the emirate.

Last week's affirmation of key projects and their budgets by the government, largely consisting of cultural assets and the construction of landmark museums, is bolstering TDIC's credit profile as the company remains dependent on support from the government of Abu Dhabi to construct key government assets. Initially, TDIC last August had cancelled a tender for a contract for the Guggenheim Museum, one of its key projects, and in October confirmed project delays.

The majority of TDIC's funding comes from the government to carry out its pipeline of government assets, while commercial projects remain funded through commercial providers and cash flows generated by existing operating assets, although cash flows will be ramped up over time. The delay of execution and delivery of the assets creates less strain on TDIC from an organisational and financial perspective and hence is viewed as positive.

Notably absent from the list of projects clarified were two additional cultural assets - a performing arts centre and the maritime museum - which TDIC was supposed to embark on during phase 2 of the development of the Saadiyat Cultural District. The impact from a delay of these projects, however, would be muted as no or little development costs would have been incurred at this stage. Three other museums - the Louvre Abu Dhabi, the Zayed National Museum and the Guggenheim Abu Dhabi - are slated to open on a staggered schedule in 2015, 2016 and 2017, respectively.

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