Masdar, a renewable energy company based in Abu Dhabi, has been assigned an ‘AA-’ long-term issuer credit rating by S&P Global Ratings, with a stable outlook.
This rating reflects Masdar’s strategic importance to the Emirate of Abu Dhabi and its role in achieving the UAE’s ambitious clean energy transition goals, including tripling renewable energy by 2030 and achieving carbon neutrality by 2050.
The company benefits from strong financial support from the government, both ongoing and extraordinary, which is critical to its operations and growth.
Key highlights
Strategic importance and government support:
Masdar is majority-owned (96 percent) by the Abu Dhabi government through state-owned entities like Mubadala Investment Company, Abu Dhabi National Energy Company, and Abu Dhabi National Oil Company (ADNOC).
Masdar has received over AED 20 billion in equity support to finance acquisitions and growth platforms. Its activities are closely tied to the UAE’s renewable energy goals, making it a key government-related entity (GRE) with a high likelihood of receiving timely financial support during stress.
Unique operating model:
Masdar operates as a platform investor, outsourcing construction and operational risks to third-party contractors. Its portfolio includes geographically diverse assets across 25 countries, with a focus on proven renewable technologies such as solar photovoltaic (PV) and onshore wind, which account for over 80 percent of its generation base.
The company generates 97 percent of its revenues through long-term take-or-pay contracts, with an average remaining contract life of 16 years.
Growth and expansion:
Masdar’s gross capacity increased from 15 GW in 2021 to 33 GW by March 2025, supported by greenfield developments and strategic acquisitions. It aims to achieve a renewable energy portfolio capacity of 100 GW by 2030, with 15 GW currently under development and an advanced pipeline of 25 GW.
The company raised AED 10 billion in green bond financing in 2025 at a low coupon rate of 5 percent.
Financial profile:
Masdar’s financial risk profile is aggressive, with high leverage expected to peak at 6.0x-6.5x debt-to-EBITDA in 2026 before stabilizing.
The company follows a disciplined financial policy, financing greenfield developments with non-recourse debt and brownfield acquisitions through equity-like shareholder contributions.
Liquidity is assessed as adequate, with a ratio of liquidity sources to uses at 1.6x over the next 12 months. Principal liquidity sources include AED 2.8 billion in unrestricted cash and AED 1 billion in funds from operations.
Environmental, social, and governance (ESG):
Masdar specializes in renewable energy, abating 14 million tons of carbon dioxide emissions annually. It actively explores innovative technologies including hydrogen production and engages in community initiatives such as education and job creation.
Governance is overseen by its Sustainability, Strategy, and Investment Committee, ensuring alignment with its mandate to develop a global clean energy portfolio.
Outlook
The stable outlook reflects Masdar’s strong ties to the Abu Dhabi government and its strategic importance. The company is expected to maintain stable cash flows, efficient operations, and good funding access, supported by regular equity injections for brownfield projects. The outlook mirrors the sovereign rating on Abu Dhabi (AA/Stable/A-1+).
Downside risks
The rating could be downgraded if:
- The sovereign rating on Abu Dhabi is lowered.
- Government support for Masdar weakens, signaling reduced strategic importance or liquidity pressures.
- Masdar’s standalone credit profile (SACP) deteriorates due to aggressive financial policies or failure to maintain EBITDA cash interest coverage.
Upside potential
An upgrade is possible if Abu Dhabi’s sovereign rating is raised to ‘AA+’, though Masdar’s SACP is unlikely to improve significantly in the next 12-24 months due to its capital spending plans.
Base-case scenario
Masdar is expected to generate AED 2.0 billion-AED 2.5 billion in distributions from invested projects in 2025-2026, increasing to over AED 3 billion by 2027.
Capex is forecasted at $20 million-$50 million annually, excluding development capex funded by non-recourse financing.
Debt is projected to rise to AED 10.5 billion-AED 11 billion by 2026, with debt-to-EBITDA peaking at 6.0x-6.5x.
Conclusion
Masdar’s ‘AA-‘ credit rating underscores its strategic importance to Abu Dhabi’s clean energy transition and its strong government backing.
Despite high leverage and execution risks, the company’s disciplined financial policies, diversified portfolio, and robust liquidity position support its growth trajectory.
The stable outlook reflects confidence in Masdar’s ability to achieve its ambitious renewable energy targets while maintaining financial stability.
