Salik Company, Dubai’s exclusive tollgate operator, recently announced the assignment of strong investment-grade credit ratings by Moody’s Ratings and Fitch Ratings. This milestone affirms Salik’s robust financial position, operational strength and proactive approach to enhancing transparency while optimizing access to capital markets.
“These very positive credit ratings received from two of the world’s leading ratings agencies, Fitch and Moody’s, are a testament to the strong business we have built and the solid financial position from which we operate. The investment grade ratings also reflect the Company’s strong balance sheet, robust liquidity position and high cash flow generation,” stated Mattar Al Tayer, chairman of the board of directors of Salik.
Fitch rates Salik A- with a stable outlook
Fitch has assigned Salik an investment grade A- issuer default credit rating with a stable outlook. The credit rating considers Salik’s unique market position in Dubai as the exclusive toll gate operator and a key state-owned entity with a long concession agreement ensuring the stability of Salik’s long-term cash flow generation. Among other considerations, Fitch also considered Salik’s strong link with the government of Dubai and its exposure to the emirate’s economy and population growth.
“Our business model affords us a unique position in the market as Dubai’s sole tollgate operator, and our consistently robust performance coupled with a very healthy balance sheet is reflected in the investment grade ratings we have been assigned today,” added Al Tayer.
Moody’s rates Salik A3 with a stable outlook
Meanwhile, Moody’s assigned an investment grade issuer credit rating of A3 with a stable outlook to Salik, reflecting the company’s close link to the development of Dubai, with positive economic and demographic trends continuing to support Salik’s strong operating performance.
Further supporting Salik’s low-risk business profile is its position as the exclusive toll gate operator in Dubai, a history of consistent traffic growth, minimal capex requirements of the business translating into high cash flow generation, modest financial leverage and strong liquidity position.
“Coming just weeks after record results for the first nine months of 2024, during which we recorded our highest-ever third-quarter revenue, we are delighted to be assigned investment grade ratings in the single A category by both Fitch and Moody’s. Making our credit ratings public underscores our commitment to transparency and demonstrates our confidence in Salik’s financial position,” added Ibrahim Sultan Al Haddad, CEO of Salik.
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Salik generates AED1.05 billion in free cash flow
As of September 30, 2024, Salik recorded a trailing twelve-month net debt/EBITDA ratio of 2.1x, significantly below its debt covenant of 5.0x, and generated free cash flow of AED1.05 billion for the nine-month period, up 1.3 percent annually, with a free cash flow margin of 64.3 percent.
“While we do not have immediate plans for public debt issuance, these ratings offer us greater future flexibility in the financial markets, and I would like to state my gratitude to the whole Salik team for their hard work towards achieving this significant milestone for our business,” added Al Haddad.
In recent developments, Dubai’s Roads and Transport Authority announced that it will implement variable road toll pricing and variable parking tariff policies, including event-specific parking tariffs, as part of a comprehensive strategy to enhance traffic flow in the city. The new Salik system, set to launch at the end of January 2025, will offer motorists toll-free passage between 1am and 6am. During weekdays, the toll will be AED6 during morning peak hours (6am to 10am) and evening peak hours (4pm to 8pm).
