Dubai Electricity Bonds Get Lowest Investment Grade at Fitch

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Dubai Electricity and Water Authority’s five-year $1 billion bond issue received the lowest investment grade at Fitch Ratings, reflecting the deterioration in the creditworthiness of the emirate.

Fitch rated the new debt BBB- and placed it on Rating Watch Negative. DEWA is Dubai’s first government-owned entity to tap debt investors since the state-owned holding company Dubai World roiled global markets in November by proposing to freeze its loan repayments.

“DEWA’s ratings remain aligned with the creditworthiness of Dubai,” Fitch said. “DEWA’s ratings are also supported by its monopolistic market position, improving efficiency levels and modern asset base.”

DEWA’s new 8.5 percent bonds, sold yesterday, are part of a $3 billion medium-term note program to fund expansion.

Moody’s Investors Service rates DEWA’s debt Ba2, two levels below investment-grade status.END