S&P gives 'developing' rating to Emaar

International rating agency Standard & Poor's yesterday said it has revised the CreditWatch implications for 'BBB+' long-term credit ratings on property developer Emaar to 'developing' from 'negative' following the announcement of merger talks with Dubai Holding's property subsidiaries.

The rating action reflects the prospective benefits on Emaar's credit profile from a merger with the real estate businesses of Dubai Holding Commercial Operations Group (DHCOG), said a statement. "The developing implications also reflect the downward pressure on the ratings from the weak Dubai real estate market if the merger is not completed," said Alf Stenqvist, Credit Analyst at S&P.

The current ratings on Emaar reflect the group's important role and strong position in the Dubai property development market as one of three government-related master developers, and its strong relationship with, and minority ownership by, the Government of Dubai (not rated). The ratings also reflect the group's low debt leverage and strong asset base. The main constraining rating factors include the inherent risks in the cyclical property development industry and the group's large exposure to the weakening of the real estate market.