RATINGS RATIONALE

"The notes will be direct and unsecured obligations of TAQA and will rank pari passu with the company's other present and future unsecured and unsubordinated obligations," says Martin Kohlhase, a Moody's Vice President - Senior Analyst and lead analyst for TAQA. "Hence, we have aligned the provisional rating with TAQA's issuer rating of A3."

The terms of conditions regarding the status and covenants of the notes mirror those of TAQA's (P)A3-rated $9 billion global medium-term note (GMTN) programme. Moody's understands that TAQA intends to use proceeds of the issuance for general corporate purposes, including the repayment of outstanding debt. According to its interim condensed consolidated financial statements per 30 September 2012, TAQA had current financial liabilities of AED9.418 billion (approximately $2.6 billion).

Moody's rates TAQA according to its rating methodology for government-related issuers (GRIs) given the company's strong links to the government. These links are evident through (1) the government's ownership of TAQA; (2) the government's representation on the company's board; (3) TAQA's mandate as the de facto sole public utility provider in Abu Dhabi; and (4) the favourable regulatory regime for utilities in the Emirate. As a GRI, TAQA's fundamental credit profile (or Baseline Credit Assessment) of ba1 receives an uplift of four notches to A3, reflecting Moody's assumption of high support.

WHAT COULD CHANGE THE RATING UP/DOWN

What Could Change the Rating - Up

While improving metrics may create upwards pressure on the BCA, that could be offset by continuing exposure to higher risk business sectors - it is difficult to offer prescriptive guidance when TAQA's strategic direction is not static, with it having signalled a more conservative approach to future international ambitions, yet with some continuing interest in expanding its power generation portfolio. Any acquisitions are assumed to be modest and complementary to its existing business.

Nevertheless, upgrade pressure on the BCA could occur should TAQA's financial profile exhibit the following characteristics on a sustained basis, consistent with investment grade expectations for a rating at the low end of the Baa-range:

- Debt to capitalisation significantly below 80%.

- Funds from operations (FFO) to interest expense of at least 2.5 times.

- FFO to debt trending towards 10%.

- Positive (RCF - capex) / debt ratio.

- Starting to generate some headroom within the financial metrics of the domestic business rather than maximising debt capacity as at present.

The guidance above is predicated on TAQA continuing to refocus its business mainly towards the low risk domestic sector; while debt to capitalisation has improved modestly, it is still weaker than when TAQA's BCA was last in the Baa-range, when the risk profile was more that of a purely domestic business.

We would also expect a continuation of its refinancing track record and the maintenance of a solid liquidity profile.

What Could Change the Rating - Down

- Although very unlikely, any changes in the regulation and oversight of TAQA's domestic operations or changes in the ownership structure could result in downward pressure on the BCA and the final rating and the lowering the government support assumptions currently viewed as high.

- Sustained lower oil prices of below $80/barrel could reverse the improving trend in the financial profile and thereby could result in pressure developing on the BCA and the final A3 ratings were debt/capitalisation to trend towards 85%, FFO/interest expense trend towards below 2 times, FFO/debt trend towards 5%, or sustained negative (RCF - capex)/debt.

- Pursuit of an aggressive or large scale acquisition strategy.

PRINCIPAL METHODOLOGY

The principal methodology used in rating Abu Dhabi National Energy Company PJSC (TAQA) was the Government-Related Issuers: Methodology Update published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Abu Dhabi National Energy Company PJSC (TAQA), headquartered in Abu Dhabi, United Arab Emirates (UAE), owns, invests in and operates companies in the fields of power generation, water desalination as well as oil and gas (O&G), which encompasses exploration and production, storage and pipelines. The company carries out these activities across the UAE and neighbouring countries in the Middle East, North America, Europe, Africa and the Indian subcontinent.

TAQA is indirectly 51%-owned by the government of Abu Dhabi (Aa2 stable), with the remaining shareholding split between the Farmers' Fund in Abu Dhabi (21%) and a free float of 28%, albeit this is limited to Emirati nationals. For the financial year 2011, TAQA reported total revenues of AED24.2 billion ($6.6 billion; +13% against 2010), net debt/capital of 77.6% (78.0%) and net debt/EBITDA of 5.0x (6.5x).

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Martin Kohlhase Vice President - Senior Analyst Corporate Finance Group Moody'sInvestors Services Limited, Dubai Branch Gate Precinct 3, Level 3 P.O. Box 506845 DIFC - DubaiUAE Telephone: 00971 4237 9536 David G. Staples MD - Corporate Finance Corporate Finance Group Telephone: 00971 4237 9536 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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