Fitch affirms ‘AA' rating with Stable Outlook for ADNOC Murban
A. SREENIVASA REDDY (ABU DHABI) Fitch Ratings has affirmed ADNOC Murban's Long-Term Issuer Default Rating (IDR) at 'AA' with a Stable Outlook, signalling very strong credit quality and confidence that the rating will remain steady in the near term. The agency also affirmed 'AA' ratings for ADNOC Murban's senior unsecured notes and sukuk certificates. ADNOC Murban is ADNOC's primary debt-capital market funding vehicle, having issued $5.5 billion of debt since 2024, with Fitch estimating a potential additional issuance of up to $4.5 billion over the next three years.Fitch's rating reflects ADNOC Murban's strong operational and strategic ties to its parent, ADNOC, and the latter's sole shareholder, the emirate of Abu Dhabi. Unlike traditional financial companies, ADNOC Murban's debt is not guaranteed by the parent. However, it generates sufficient cash flow to service its debt, due to its rights over the assigned volumes of Murban crude oil produced by ADNOC. Murban crude oil is Abu Dhabi's flagship crude oil grade. ADNOC Murban has rights to receive 1 million barrels per day of ADNOC's crude oil production for 30 years — equivalent to 20–25% of ADNOC's total production capacity. This entitlement, backed by a firm volume availability commitment and a cash settlement backstop from ADNOC, ensures robust cash flow generation even under conservative oil price scenarios. Fitch estimates that at Brent crude prices of $60 per barrel, ADNOC Murban would generate annual EBITDA of about $23 billion. The company is exempt from oil production taxes and royalties, and incurs no capital or significant operating expenses. Excess cash flow is channelled to ADNOC through dividends or repayment of capital contributions, but these payments are subordinated to debt obligations. Fitch noted that ADNOC Murban's cash flow resilience is exceptionally strong. Even if prices fell to $1 per barrel, the company is expected to comfortably service interest payments on its debt, and at $20 per barrel, it could repay up to $7 billion of principal annually — reducing the likelihood of needing support from ADNOC or Abu Dhabi.The agency also highlighted ADNOC Murban's low leverage, with projected EBITDA gross leverage staying below 1.0x even if total gross debt rises to $10 billion over the next three years, and conservative interest coverage of at least 40 times through 2028.
Strategic and operational incentives for ADNOC to support ADNOC Murban are considered high, reinforced by overlapping management and its integration within the group's operations.
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