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$10bn bond issue boosts major Dubai players

The recent $10 billion bond issue by the UAE government has given a lift to six major Dubai government-owned companies, Moody's Investors Service said on Wednesday.

The ratings agency concluded its review of the ratings of DP World, Dubai Electricity & Water Authority (DEWA), Jebel Ali Free Zone (Jafz), DIFC Investments (DIFCI), Dubai Holding Commercial Operations Group and Emaar.
In confirming the ratings of four and downgrading two, Moody's said the provision of federal funds to Dubai in the form of a $10 billion bond had provided greater assurances to the market, that explicit financial support from the UAE government was forthcoming.

Indeed, the severity of potential rating actions, which Moody's stated at the beginning of the review could have been within a magnitude of two notches, was moderated as a result of the supportive action by the federal government.

Companies whose ratings were confirmed were DP World, DEWA, Jebel Ali Free Zone and DIFC Investments. The outlook on all ratings was negative.

Companies whose ratings were downgraded were Dubai Holding Commercial Operations Group and Emaar Properties, the outlook on both ratings was also negative.

The Moody's report its decision to confirm its ratings on DP World, DEWA, Jafz and DIFCI was "based on all four companies' highly visible and strategic mandates, which carry significant relevance and importance not only to Dubai, but the UAE and the wider region".
 
Moody's said that all four entities were central pillars of the country's economic infrastructure and would therefore continue to benefit from federal support.

The agency added that the one-notch downgrade of Dubai Holding Commercial Operations Group and Emaar Properties reflected the more severe fundamental strains facing their business models.

"Both companies are real estate master developers with hospitality businesses and are thus more immediately exposed to the Dubai real estate market," Moody's added.

DP World, DEWA, Jebel Ali Free Zone and DIFC Investments were all confirmed with a A1 rating. Dubai Holding Commercial Operations Group was downgraded to A2 from A1, while Emaar Properties was downgraded to Baa1 from A3.

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