Jebel Ali Free Zone downgraded by Moody's

RATINGS DOWNGRADE: Jebel Ali Free Zone downgraded one notch by ratings agency Moody's. (Getty Images)

Moody’s on Monday downgraded Jebel Ali Free Zone (JAFZ) and put two other Dubai Government Related Issuers (GRIs) on review for possible downgrade.

The ratings of JAFZ were downgraded by one notch to A3 from A2 and placed on review for further possible downgrade, while the A1 ratings of DP World, DIFC Investments (DIFCI) and Dubai Electricity and Water Authority (DEWA) were put on review for possible downgrade.

The A3 ratings of Dubai Holding Commercial Operations Group (DHCOG) and the Baa1 ratings of Emaar were unchanged and remain on review for downgrade pending the merger of DHCOG's real estate operations with Emaar.

“While Moody's takes comfort from the government's recent announcement of the creation of a support fund to help GRIs…further disclosure is required on the specific conditions and mechanisms of such support, as well as on which of Dubai"s GRIs are considered strategically important,” the ratings agency said.

Moody's said it hopes to obtain further details on those issues during the course of the ratings review.

JAFZ’s liquidity arrangements with Dubai World have most likely been impaired by the latter’s role as guarantor of Nakheel’s $3.5bn sukuk maturity in December, it said.

“Nakheel’s maturity remains a major test of the government’s willingness to support state companies, which will ultimately determine the various degrees of government support that are factored into Dubai GRI ratings,” Moody’s said.

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