Fitch assigns stable outlook rating to HFZA

Fitch Ratings has affirmed Sharjah-based company Hamriyah Free Zone Authority's (HFZA) ratings at Long-term Issuer Default (IDR) "BBB+" with a stable outlook and Short-term IDR "F2".

The ratings reflect a relatively strong relationship between HFZA and Sharjah, using Fitch's parent and subsidiary rating linkage methodology.

The rating of HFZA is linked but not aligned to Fitch's assessment of Sharjah's sovereign credit quality, said a statement.

The ratings primarily reflect HFZA's close links to Sharjah, including Sharjah's direct 100 per cent ownership of HFZA and representation in HFZA's management, the provision of free land by Sharjah and the moderate strategic importance of the free zone to Sharjah's economy.

"Therefore, Fitch believes that Sharjah would directly or indirectly support HFZA, in case of need. This is a key component of the ratings," it said.

On a standalone basis, the financial profile of the HFZA would likely warrant a lower rating than the one assigned. The ratings are supported by HFZA's strong standalone credit profile, reflecting moderate forecast leverage and stable income base. The latter is based on the relatively mature rental portfolio, coupled with long lease terms, low vacancy rates and low speculative development.

The ratings are limited by HFZA's exposure to cyclical end-markets particularly in the current challenging market conditions, a lack of high-quality, blue-chip tenants when compared to its global peers.

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