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Mubadala Seeks Credit Rating

ABU DHABI, May 5 (Reuters) – Abu Dhabi's Mubadala Development Co, an investment agency for the government of the world's fifth-largest oil producer, said it is seeking its first credit rating in a bid to lower borrowing costs.

“We are using great advisers and will be rated by multiple agencies,” Chief Operating Officer Waleed al-Muhairi told Reuters by telephone on Monday. “It is about increased transparency and it is about decreasing the cost of debt.”

Mubadala should secure the ratings by the end of the year, Muhairi said, declining to give details.

Investments by sovereign wealth funds have raised concerns about their potential political motives among Western countries, some of which are considering restrictions on their activities.

Last week, the International Monetary Fund and 25 sovereign wealth funds established an international working group to draft the first best practice guidelines for the state-owned funds.

The guidelines in governance and transparency are aimed at helping ease worries about the funds' growing size and influence, since many reveal little about their investments.

Asked on Monday whether Mubadala, which manages over $10 billion in assets, plans to tap markets for financing, Muhairi said: “We have different sources of capital and the government is not the only source and we will be looking at different options … it is just a refining of our strategy.”

Mubadala has diversified stakes in energy, aerospace, telecommunication, automotives, healthcare, real estate and ship building sectors. 

In the last two years, it has bought stakes in U.S.-based Advanced Micro Devices (AMD.N: Quote, Profile, Research), the world's second-largest computer processor maker, and Swiss aircraft maintenance firm SR Technics. Last September, it bought a 7.5 percent stake in the Carlyle Group [CYL.UL] for $1.35 billion.

Half of Mubadala's holdings are in the Middle East, and the rest elsewhere, Muhairi has said in the past. It has controlling stakes in about 60 percent of companies it invests in, while 40 percent are minor stakes.

Sovereign wealth funds, many based in oil producing countries as well as Asian exporters such as China, control between $2 to $3 trillion in assets.

The funds are concerned about protectionist restrictions on their investments, which could hamper the international flow of capital.

In recent months they have shown they are also market stabilizers, investing billions of dollars in Western banks such as Citigroup Inc (C.N: Quote, Profile, Research), whose balance sheets were hit by the financial market turmoil.

Abu Dhabi is the United Arab Emirates biggest oil producer, controlling over 85 percent of the UAE's oil output. (Writing by Amran Abocar; Editing by Stephen Weeks)