Tensions arise from ratings downgrades

* username: rupertbu

At least 10 companies in the Gulf have severed ties with credit ratings agencies in the past year, highlighting tensions arising from a series of downgrades and revised assumptions of government support.

Disputes between companies and the agencies that rate them have only intensified following Dubai World’s announcement in November that it would seek a standstill agreement on US$26 billion (Dh95.49bn) of debt, analysts say.

A central catalyst of the disputes has been a change in how the agencies, which gauge the risk of default on loans, bonds and other financial obligations, treat government-owned companies. All three big ratings agencies – Standard & Poor’s, Fitch Ratings and Moody’s Investors Service – have recently pulled back on assumptions of government support.