Dec 04 2009 |
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S&P, Fitch Downgrade More Dubai Companies
DUBAI -- Standard & Poor's and Fitch Ratings have downgraded more Dubai state-related companies to junk territory, over apprehensions these entities may not get government support for their financial liabilities. The downgrades include four Dubai-based banks.S&P on Wednesday slashed the ratings of six Dubai government-related entities, or GREs, with five that were reduced to junk grade. The five whose ratings were moved out of investment grade were DIFC Investments LLC, DP World Ltd., Dubai Holding Commercial Operations Group LLC, Emaar Properties PJSC and Jebel Ali Free Zone . Dubai Multi Commodities Centre Authority was already rated as junk.
DIFC Investments LLC and Jebel Ali Freezone were cut to B+ from BBB-. DP World , the worlds' fourth largest port operator and a unit of Dubai World , and Emaar Properties , were downgraded to BB+ from BBB-. Dubai Holding Commercial Operations Group LLC slipped into junk grade at BB+ from BBB+.
"The rating actions reflect our lowered expectations regarding the likelihood of extraordinary support from the Dubai government," said S&P credit analyst Farouk Soussa.
Soussa said S&P does not see the Dubai government as prioritising the financial obligations of the downgraded GREs.
S&P also lowered ratings of four Dubai banks.
The long-term counterparty ratings on Emirates Bank International , National Bank of Dubai and Mashreq Bank were lowered to BBB from A-. The long and short-term counrerparty ratings on Dubai Islamic Bank to BBB- from BBB+. The four banks remain on creditwatch with negative implications. These banks are heavily exposed to the Dubai-based GREs that S & P has downgraded.
"Our lower assessments of the banks' stand-alone credit profiles hinge on our view that their respective financial profiles, including their asset quality and capitalisation, are weaker than we had previously assessed due to their large exposures to the GREs," said S&P credit analyst Emmanuel Volland.
Fitch Ratings on the other hand, cut its long-term issuer default rating , or IDR, and senior unsecured rating for Dubai Holding Commercial Operations Group to junk grade.
Dubai Holdings' IDR and senior unsecured debt ratings were cut by Fitch to BB, two notches below investment grade, from BBB-, the lowest investment grade rating.
Fitch said its ratings action on Dubai Holdings reflected a further review of the level of government support for the company's financial obligations.
© Khaleej Times 2009
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