Fitch Ratings has upgraded EIG Pearl Holdings S.a r.l.'s Issuer Default Rating (IDR) and senior secured notes' rating to 'A+' from 'A'.

The Outlook is Stable.

The upgrade follows the upgrade of Saudi Arabian Oil Company's (Saudi Aramco) Long-Term Foreign- and Local-Currency IDR to 'A+' from 'A' (see Fitch Upgrades Saudi Aramco to 'A+'; Outlook Stable). This in turn followed the upgrade of Saudi Arabia (A+/Stable).

RATING RATIONALE

The ratings are based on the contractual structure between AssetCo, of which Pearl owns 49%, and Saudi Aramco. AssetCo owns usage lease rights to a stabilised crude oil pipeline network in Saudi Arabia. Saudi Aramco owns the remaining 51% of AssetCo, operates the pipeline network and pays a tariff for its usage. This structure means Pearl's ratings are linked to Saudi Aramco's rating rather than being driven by Pearl's financial metrics, which Fitch views as adequate.

KEY RATING DRIVERS

For further information on EIG Pearl's rating, see ' Fitch Affirms EIG Pearl Holdings S.a r.l.'s Notes at 'A'; Outlook Positive', published on 20 December 2022 at www.fitchratings.com.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Downgrade of Saudi Aramco's Long-Term IDR

Failure to refinance the bridge facility in a timely manner

Additional material amounts of subordinated debt for Pearl may lead to negative rating action on the IDR

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrade of Saudi Aramco's Long-Term IDR

Best/Worst Case Rating Scenario

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

TRANSACTION SUMMARY

AssetCo has lease usage rights regarding a portfolio of 44 stabilised crude oil pipelines covering over 4,000km in Saudi Arabia. The pipelines are owned by Saudi Aramco. The asset portfolio includes pipelines, storage tanks, pump stations, surge skids and pressure reduction stations - 100% of Saudi Aramco's domestic crude oil production flows through these (excluding volumes from Saudi-Kuwaiti partitioned neutral zones). The pipelines supply customers of Saudi Aramco's crude oil production including refineries, power plants and export terminals. As such, the pipeline network is integral to Saudi Arabia's ability to commercialise its oil production.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

RATING ACTIONS

Entity / Debt

Rating

Prior

EIG Pearl Holdings S.a r.l.

LT IDR

A+

Upgrade

A

EIG Pearl Holdings S.a r.l./Senior Secured Debt/1 LT

LT

A+

Upgrade

A

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VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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