Fitch Ratings says policy developments surrounding state support for Dubai-based entities will not result in a broader reassessment of how the agency assesses sovereign support, or current expectations of support, when assigning corporate bond ratings for state-owned enterprises (SOE) in other countries.
Dubai's policy volte-face has led to sharp rating downgrades for Fitch rated SOEs in the emirate (DEWA rated 'BBB-'/RWN; DHCOG rated 'BB'/RWN). A review of the conditions applicable to this individual case indicate, however, that the approach used by Fitch in rating state-owned enterprises (SOE) captures both the risks and benefits of state ownership consistent with other 'parent'/'subsidiary' relationships. As a result, although the ratings of all corporates generally remain more vulnerable than usual to rating downgrades, given the general economic background, Fitch does not anticipate major systematic revisions to either its expectations of state support, or their influence on our ratings.
- State ownership plays a minor role in Fitch SOE ratings
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