DP World Ltd., the Middle East’s biggest port operator, and Dubai Electricity & Water Authority were among five companies that had their credit ratings cut at Moody’s Investors Service, citing tightened government criteria for supporting state-controlled entities.
“The downgrades reflect recent disclosures that reveal the increasing conditionality under which support may be provided,” Dubai-based Philipp Lotter and London-based David Staples wrote in a report today. The criteria include whether the government- owned companies “are able to demonstrate sustainable business plans, the on-going support of their existing financial creditors, and realistic prospects of fulfilling their repayment obligations.”
Dubai and its government-owned companies borrowed $80 billion to finance its transformation into a regional financial and tourist hub before the global credit crisis left companies struggling to attract investors to refinance debt. Dubai, which set up a $20 billion support fund, will probably complete raising a second $10 billion by the end of November, Mohammed Alabbar, who headed the government committee evaluating the impact of the global credit on the emirate, said last month.
DP World, Dubai Electricity, and DIFC Investments had their ratings cut to A3 from A1. Jebel Ali Free Zone, a government- owned industrial park, was downgraded to Baa1 from A3, while Dubai Holding Commercial Operations Group LLC, the state- controlled entity that’s in talks to merge some of its units with Emaar Properties PJSC, had its ratings lowered to Baa1 from A3, the report said. Emaar’s rating was unchanged.
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