S&P rates Dar Al Arkan notes BB-

Standard & Poor's said it assigned the BB- long-term corporate credit rating to Dar Al Arkan and assigned a BB- rating to the proposed benchmark senior unsecured sukuk notes issued by special purpose vehicle Dar Al Arkan International Sukuk Co. II and guaranteed by Dar Al Arkan.

The outlook is stable.

"The ratings on DAAR reflect its exposure to the speculative, cyclical and capital-intensive nature of land development and homebuilding activities; the immature and still-opaque characteristics of the housing market in Saudi Arabia (AA-/stable/A-1+); the volatility of revenues from land sales; the potential execution risks from its increasingly large projects; and its financial risk profile, which we consider to be significant," S&P analyst Pierre Georges said in a statement.

These weaknesses are partly offset by Saudi Arabia's favorable demographic and economic fundamentals, the company's somewhat strong market position deriving from its sizable and generally well-located land bank, and the high margins the company generates on land sales and development activities, the agency said.

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