Dar Al-Arkan retains its Standard & Poors rating (8980M)

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RNS Number : 8980M

Dar Al-Arkan International Sukuk II

23 August 2011

Dar Al-Arkan Retains Its Long-Term Corporate Rating at "BB-", With a Stable Outlook from Standard & Poor's

Dar Al Arkan Real Estate Development Company (DAAR) announced that it has received a reaffirmation of its "BB-"long-term corporate rating with a stable outlook from Standard & Poor's (S&P) after its recent review.

The reaffirmation was granted, given that DAAR's financial performance during the second quarter improved in comparison to the first quarter in terms of margins, collection of trade receivables and operating cash flow generation. DAAR also maintains sufficient leverage for its financial covenants; Shareholders' equity of $4.0 billion (minimum requirement $2.3 billion), total liabilities to total assets of 37% (maximum permitted 65%), and current ratio of 2.1x (minimum required 1.1x).

In addition, DAAR has managed its cash consumption during the second quarter. By slowing down land acquisitions, while account receivable balances were collected and decreased from their peak during the first quarter of 2011.

On a macro level, the Saudi government injected this year SAR40 billion to the Real Estate Development Fund (REDF) that provides soft loans Saudi citizens for the acquisition of housing. Also the Saudi government housing stimulus of SAR250 billion in March 2011 for the development of 500,000 housing units will increase demand for land and housing developments in the short to medium term.

Commenting on this announcement, Mr. Abdullatif Al Shalash, Managing Director of DAAR said, "The Company's ability to retain its credit rating from S&P reflects the stable financial position of DAAR and shows its capability to meet its long/short term financial obligations as well as its resilience managing against adverse changes in economic conditions and/or operating environment thus ensuring the continuity of implementing our projects". Commenting on DAAR's macro level position, "DAAR is well positioned to capitalize on the short-term with the REDF initiative and in the medium term on the housing stimulus package".

Mr. Al Shalash also added, "S&P initiated coverage on DAAR in January 2010, and has since maintained its "BB-" long-term corporate credit rating, with a stable outlook.This continuous reaffirmation of DAAR corporate credit rating by S&P is indicative of the company's positive record of accomplishment within the industry and its strong position as the largest real estate developer in the Kingdom."

This information is provided by RNS

The company news service from the London Stock Exchange

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