Nov 05 2009 |
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Moody's Downgrades Five Dubai Companies
DUBAI -- Moody's Investors Service has downgraded the credit ratings of five companies in Dubai run by the state, saying the emirate's huge debts has forced it to create a more stringent criteria for bailing out distressed government entities.The credit ratings agency has downgraded the credit ratings of DP World , Dubai Electricity and Water Authority and DIFC Investments to A3 from A1. Industrial park Jebel Ali Freezone , or Jafza , was cut to Baa1 from A3.
Dubai Holding Commercial Operations Group LLC which is in talks to merge its real estate subsidiaries to Emaar Properties , saw its ratings slashed to Baa1 from A3. Emaar 's credit ratings were maintained at Baa1.
"The downgrades follow recent disclosures of increased conditionality around when support could be provided to these goverment-related issuers," said Moody's in a report on Wednesday.
"Our rating actions were prompted primarily by the lack of a transparent policy articulation concerning the criteria and mechanisms of government support to government-related issuers, and the appearance of a greater distinction in the government's own language regarding its own debts versus the debt of its entities." Government-run companies in Dubai are estimated to have piled up debts of about $80 billion, which is approximately 100 per cent to 120 per cent of the emirate's 2008 GDP, or between 9 and 11 times the central government's 2008 revenues.
© Khaleej Times 2009
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