Moody’s Investors Service has downgraded Qatar Real Estate Investment Company, which has issued $300 million in Sukuk (Islamic Bonds) from A2 to Baa1. Moody’s also issued an advisory for possible additional downgrading in the future.
The move was prompted by the announcement that Qatar Real Estate Investment Company would become a wholly owned subsidiary Barwa Real Estate, suggesting that government ties to Qatar Real Estate would be weakened. SFW readers will recall that Qatar was basically forced to bail out its entire banking sector in late 2008 and early 2009, so government ties to financial firms is seen as key there.
Given the rash of defaults which have hit Sukuk in the past year, a downgrade by Moody’s of a Sukuk issuer is a serious event.