Thursday 5 November 2009

Moody’s downgrades Dubai companies

Moody’s on Wednesday downgraded five Dubai government-related issuers, citing the tighter conditions under which the government is likely to extend financial support.

The ratings agency downgraded from A3 to A1 DP World, the global ports operator; Dubai Water & Electricity Authority; and the investments arm of Dubai International Financial Centre; and from A3 to Baa1 Jebel Ali Free Zone; and the non-financial assets of Dubai Holding, the investment vehicle of the emirate’s ruler.

Listed real estate giant Emaar Properties, in which the government has a roughly one-third stake, maintained its Baa1 rating.

The downgrades come despite rising optimism that Dubai will be able to meet upcoming obligations on its $80bn debt mountain. Markets are betting that the government will help raise in December the $4.05bn needed to repay a sukuk, or Islamic bond, belonging to offshore developer Nakheel, which is guaranteed by its highly indebted government-owned parent, Dubai World.

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