Moody's Ratings upgrades PNC Investments CFR to Ba2
PNC Investments LLC (PNCI), the parent company of global luxury real estate developer Sobha Realty, has received an upgrade in its Corporate Family Rating (CFR) from Moody's Ratings, which raised the rating to Ba2/stable from Ba3/stable. Additionally, the senior unsecured rating of PNCI's existing $500 million sukuk issued by Sobha Sukuk Limited has been affirmed at Ba2, all outlooks remain stable.
This upgrade reflects PNCI's continued strong sales, robust construction activity, and significant improvement in credit metrics. In 2024, revenue rose to Dh8.9 billion from Dh6.5 billion in the previous year. Moody's-adjusted debt to EBITDA improved to 1.7x from 2.7x in 2024 and is expected to further strengthen to 0.9x in 2025.
As the second largest privately held residential developer in Dubai by sales, Sobha Realty continues to demonstrate the strength of its Backward Integration Model, allowing full control from design to delivery. This, coupled with a strong backlog of more than Dh23 billion, positions the company to navigate evolving market dynamics effectively while delivering on its commitment to excellence and timely project delivery.
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The National
5 hours ago
- The National
Bond market is sending out distress signals, but investors don't need to panic
Investors tend to fixate on the stock market, but there are times when the bond market cries out for our attention, too. That's definitely the case today, because it's sending out distress signals. The global bond market is actually the bigger of the two, worth about $140 trillion, compared with $115 trillion for equities. And when bond yields surge, the ripple effects can shape everything from mortgage rates to stock valuations and government solvency. In recent weeks, yields on long-dated US government bonds, or Treasuries, have jumped to their highest levels since the global financial crisis. Investors are demanding more interest to lend to governments awash with debt, at a time when sticky inflation deters central bankers from slashing interest rates. Tom Stevenson, investment director at Fidelity International, said the US 30-year Treasury yield climbed above 5 per cent in May as markets recoiled at US President Donald Trump's new tax cut proposals, known as the 'Big, Beautiful Bill'. That package alone could add more than $3 trillion to US debt, which already stands at a mountainous $36 trillion. It could lift the country's debt-to-GDP ratio from about 100 per cent today to 125 per cent within a decade. 'The prospect of higher borrowing and unsustainable debt servicing costs led Moody's to downgrade the US prized triple-A credit rating. Debt interest payments, already at $880 billion a year, will rise further as a result,' Mr Stevenson says. He sees trouble ahead. 'The US has lived beyond its means thanks to strong global demand for its debt. But confidence is beginning to wane, with investors seeking to diversify elsewhere.' Vijay Valecha, chief investment officer at Century Financial in Dubai, says a similar story is unfolding elsewhere. In Japan, 30-year yields have climbed towards 3 per cent following the weakest demand in a decade. In the UK, 30-year gilt yields briefly touched 5.55 per cent as government borrowing soared. Yet at the same time, stock markets have rallied after Mr Trump paused his 'liberation day' trade tariffs on April 9, Mr Valecha says. 'US markets enjoyed a V-shaped recovery with the S&P 500 up almost 20 per cent, while the tech-focused Nasdaq rose 27 per cent.' The UK's FTSE 100 and Japan's Nikkei 225 are both trading above key technical levels, he adds. But investors shouldn't assume this will continue. 'Global government debt is rising fast, pushing 95 per cent of GDP," he says. "If this continues, debt could reach 100 per cent of GDP by the end of the decade.' Global inflation is also proving sticky, driving up interest rates and yields. That's a warning shot for stock markets. Mr Valecha flags up something called the 'equity risk premium', which measures the difference between what investors can expect from shares and the yield from lower-risk bonds. 'As bond yields rise that gap gets smaller, it becomes harder to justify paying high prices for shares, especially when valuations are already stretched.' The equity rally may continue but it will be bumpier, and careful stock picking is required, Mr Valecha says. Near-zero interest rates Near-zero interest rates allowed governments to borrow freely in the past decade, but that era is now over, says Charu Chanana, chief investment strategist at Saxo Bank. 'Rising sovereign debt is arguably one of the most underappreciated long-term risks to global financial stability.' If interest rates remain elevated, this could crowd out public investment, put pressure on social spending and, ultimately, reduce economic dynamism, she says. High debt levels also suppress growth, which fuels more borrowing in a vicious cycle. 'The fiscal space to respond to future crises is being eroded,' Ms Chanana says. The risk is amplified in emerging markets, many of which have borrowed heavily in US dollars, making debt harder to service if their currencies weaken. Corporate earnings remain resilient but the equity rally may have run its course, she says. 'Further equity upside may require either stronger earnings growth or a clearer path towards monetary easing.' While cash and bonds offer short-term comfort, don't overdo the flight to safety. Ms Chanana warns that higher inflation will chip away at the real return. 'Increased exposure to cash or bonds may not be sufficient to preserve or grow wealth over the long term.' Instead, she favours a diversified approach. 'Equities, particularly those tied to structural themes like AI and digital infrastructure, continue to offer compelling growth opportunities.' While gold has stood bright as a hedge against inflation and economic and political volatility, it also has one big drawback as yields rise – it doesn't pay interest or dividends. Higher yields increase the opportunity cost of holding gold, but that hasn't deterred investors yet, with the price up 26 per cent this year. 'Gold still plays a strategic role as a hedge against systemic risk, currency debasement and geopolitical uncertainty,' Ms Chanana says. Should investors turn back to bonds? Tony Hallside, chief executive of Dubai-based brokers STP Partners, agrees that gold still has a role to play in a diversified portfolio but suggests rebalancing towards high-quality fixed income. 'Investment-grade bonds, especially with shorter durations, provide attractive yields while preserving capital. They offer stability and liquidity when markets turn turbulent." 'That doesn't mean abandon stocks entirely, but it does mean being more selective." Amol Shitole, head of fixed income at Mashreq Capital, sees an opportunity in emerging market bonds, particularly in the Middle East and North Africa. Mena bonds continue to enjoy haven status due to their superior credit quality, he says. 'We favour the UAE, Qatar, Oman and Morocco for their strong fundamentals and ongoing structural reforms.' He says Mashreq remains underweight on Saudi Arabia and Bahrain, citing fiscal risks and tight valuations. He doesn't expect US yields to spiral uncontrollably. 'We believe US Treasuries will continue to benefit from flight-to-safety demand during slowdowns or uncertainty.' In equities, he sees opportunities in small caps and value stocks, particularly as higher interest rates pressure growth sectors. 'A well-diversified multi-asset portfolio including equities, fixed income, gold and alternatives can yield attractive returns of 7 per cent to 7.5 per cent a year.' There is little prospect of a return to ultra-low interest rates, but at least this means bond investors are being rewarded gain. Equity investors must be more careful, but strong companies still offer solid long-term value. Gold remains a valid hedge. As ever, diversification is the best defence.
Zawya
2 days ago
- Zawya
How Africa's new credit agency is challenging global power brokers?
For governments, a credit rating is more than a financial signal. It is a verdict that can influence the cost of borrowing, access to markets and, ultimately, the ability to provide for their citizens. Rating decisions are made behind closed doors in a private process that isn't open to assessment or scrutiny. For African countries, this opacity can be especially damaging. When rating decisions lack transparency, it's impossible to challenge potential biases or inconsistencies in methodology that put developing economies at a disadvantage. The result is higher borrowing costs that drain resources from healthcare, education and infrastructure investment. Africa's new credit rating agency has the chance to change this. The African Credit Rating Agency is an initiative under development by the African Union and its partners. It is more than a new entrant; it is an attempt to rethink how financial authority is earned, exercised and scrutinised. The new agency plans to introduce transparent governance structures that could revolutionise rating methodology. As a researcher who has looked closely at the working of rating agencies, I believe this opportunity to bring transparency to financial governance isn't just about better ratings. It's a step towards economic sovereignty. Success for the African Credit Rating Agency shouldn't be measured by whether it displaces the 'big three' rating agencies (Standard & Poor's, Moody's and Fitch). The real question isn't whether an African agency can compete, but rather whether it can show the world how to rate credit differently. A flawed processThe three big agencies do publish their methodologies – their criteria and risk models. This creates an illusion of transparency. Yet the final judgments emerge from committee meetings that produce no public record, no accountability, and no right of meaningful appeal. These rating committees typically comprise five to 10 analysts who meet in closed sessions to make each sovereign rating decision. S&P, Moody's and Fitch each operate internal rating committees for every sovereign rating decision. The deliberations, dissenting views, and specific reasoning behind final votes remain confidential. Only a brief summary is provided with a rating decision. Research has shown that credit rating agencies are more accurate at assessing the creditworthiness of advanced economies than developing economies. There have also been studies on the discrepancy between what is expected when the public methodologies are applied and what the agencies actually rate. These studies have been done for economies like Hong Kong and China, but no equivalent research has yet been undertaken for African sovereigns. This discrepancy exposes an accountability void. When methodology-based predictions miss the mark, we must question what happens in those committee rooms. Especially when African nations are being assessed by analysts stationed continents away, with limited understanding of local economic and political realities. The African Credit Rating Agency could make three changes to the way ratings are done:through public deliberationsby forming hybrid committeeswith technological intervention. First, it could release committee transcripts within 30 days of each decision. This would give markets and governments unprecedented insight into rating rationales. This isn't radical – central banks already publish meeting minutes, and courts publish opinions with dissenting views. Second, it could pioneer panels that include not only rating analysts, but regional economists, sectoral specialists, and even civil society observers. All with recorded votes. This diversified expertise would disrupt 'group think' while capturing nuances of African economies that traditional agencies overlook. I have examined this idea from the perspective of injecting climate and sustainability-related expertise into credit rating committees. I believe this is a crucial step to take to evolve the concept of the credit rating committee. Why the big three keep it closedThe industry thrives on privacy – protecting proprietary methodologies and shielding decisions from external challenge. And the natural oligopoly (a market dominated by a few large players due to high entry barriers, reinforced by market preference for predictability) helps it stay that way. The sovereign credit ratings of the three big agencies are built on quantitative and qualitative factors. But research shows that sovereign ratings are subjected to qualitative understandings. This puts developing economies at a disadvantage when agencies demonstrate pro-western biases because they lack data or knowledge. The impact of a credit rating downgrade for a sovereign borrower is usually multifaceted. Research shows that a single-notch downgrade can raise borrowing costs by more than 100 basis points, equivalent to an extra US$100 million annually on a US$10 billion bond. Investors prefer fewer, stronger signals rather than many competing views. So, there's little incentive for established players to change. The African Credit Rating Agency, as a new entrant, can offer something the incumbents won't: governance innovation that serves both markets and nations. Radical openness will shake markets, at least at first. Committee members might face political pressure. Transparency alone doesn't guarantee fair outcomes. But the world already demands transparency from central banks and constitutional courts. Why accept anything less from institutions that shape sovereign destiny?Next stepsBy 2050, one in four people on Earth will be African. The financial architecture serving them must evolve towards systems that recognise the continent's unique strengths. Opening the rating committee to view represents more than technical reform – it's about shifting who holds power in global finance. If it does this, the African agency won't just deliver better ratings; it will model how global finance can be governed more justly. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Gulf Today
3 days ago
- Gulf Today
‘Big beautiful bill' is a budget-busting boondoggle
Patricia Murphy, Tribune News Service Days before the House passed President Donald Trump's 'big beautiful bill,' Moody's Ratings agency had an ominous warning about the US economy. Because of America's recent history of running up huge debts and deficits, and no change in sight, 'the United States' fiscal performance is likely to deteriorate' relative to similar countries. As a part of that warning, Moody's downgraded the country's credit rating from its AAA score to AA1. Despite that red flag, House leaders forged ahead, passing their 10-year tax-and-spend plan, the One Big Beautiful Bill Act, by a single vote. Unfortunately, the bill not only ignores Moody's debt warning, it looks more like one big, beautiful boondoggle. Included in the gargantuan bill are $4.5 trillion in tax cuts, more than $800 billion in cuts to Medicaid, food stamps, and other social programs, and significant boosts in spending for defense and immigration enforcement. Costs of some social programs, including food stamps, are also shifted to states by the House. My colleague Tia Mitchell reported this week that Georgia officials could now be on the hook for more than $800 million in food spending if the GOP bill goes through. Other states that expanded Medicaid under Obamacare will absorb more of those costs, too. All of the cuts to social safety net programs came, in part, to help pay for the tax cuts in the bill, which are heavily weighted toward high-income earners. For example, the working-class tax breaks that Trump promised on the campaign trail, namely eliminating taxes on tips, overtime pay, and car loan interest, will only last through the end of Trump's term in 2028. But the income tax cuts, including for the richest Americans, as well as tax breaks for estates and investment income all become permanent. The House also stuffed loads of perks for special interests into the 1,100-page bill. One measure bans states from passing new regulations on artificial intelligence for 10 years. So if Georgia lawmakers decide they want to limit the use of AI in Georgia classrooms, like they did with cellphones this year, the Big Beautiful Bill Act would stop that until 2036. It would also mean Georgia lawmakers could not pass SB 9, a bill to ban deepfakes in political ads, which passed the state House and Senate earlier this year, but did not get to final passage. A different measure, this one for gun dealers, was put into the bill by Georgia's U.S. Rep. Andrew Clyde. The Republican from Athens owns two large gun stores, which both sell gun silencers. Clyde flipped from a 'no' to a 'yes' after the $200 tax on silencers was eliminated, at a cost of $1.4 billion. 'My Democrat colleagues have asked, 'How did it get in the bill, what was in the deal and who asked for it?'' Clyde said during the House debate. 'No deal. I believe (Speaker Mike Johnson) with the purest of motives wanted to restore a constitutional right. Who asked? Me, I asked.' Of all of the special interests in the bill, the most special of all seems to be Trump himself. The bill mentions Trump's name 52 times. It also creates new $1,000 savings accounts for babies born during Trump's second term called 'Trump Accounts.' It even has language to make it harder for federal courts to enforce injunctions against executive branch officials, a lot like the injunctions Trump has run into as he tries to expand his own powers in the White House. Every spending bill is a political document, of course, and a Republican Congress cutting taxes and rolling back Biden-era climate measures is no surprise. But what is a surprise is the bill's price tag, $3.94 trillion, which will all get piled onto the nation's $36 trillion debt that Moody's just warned about. For every tax cut and spending measure that may be a good idea on its merits, it's all getting paid for with more borrowed money. It's a long way from the Tea Party movement, which exploded onto the scene in 2009 after Congress passed big bailouts for banks following the 2008 financial crisis. The national debt then was $13 trillion, one third of what it is today. Republicans then promised they would finally tackle the debt and the deficit. This bill does the opposite. Even Elon Musk, the mastermind of the Department of Government Efficiency, said so on his last day as a government employee this week, adding that the bill 'undermines the work that the DOGE team is doing.' 'It can be big or beautiful, but I don't know if it can be both,' he said. If I was a House Republican at the beginning of this year, I had one job — to reduce the debt and deficit. With Trump in the White House, Republicans in control of Congress, and Musk promising to modernize and remake the federal government, the House bill was supposed to be the vehicle for all of that to happen. Instead, they just passed one big, beautiful boondoggle.
