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Mon 15 Mar 2010 09:52 AM

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Dubai Holding Commercial 'to avoid restructuring'

'Company’s contractors are likely not in a position to trigger a default' - JPMorgan.

Dubai Holding Commercial 'to avoid restructuring'
CONFIDENT: A JPMorgan Chase report has said Dubai Holding Commercial Operations Group is likely to avert restructuring.

Dubai Holding Commercial Operations Group, the investment company owned by Dubai’s ruler, will avoid debt restructuring as its balance-sheet and cash-flow profile appear “sufficiently strong,” JPMorgan Chase & Co said.

“The company’s contractors, despite being owed a substantial amount of money, are likely not in a position to trigger a default,” Zafar Nazim, a London-based analyst at the bank, wrote in the report dated March 12. “We do not expect DHCOG to go through a restructuring.”

JPMorgan maintained its “overweight” rating on all DHCOG’s bonds with a preference for 6 percent notes due 2017. “We are comfortable with the company’s ability to refinance its $555m revolver, due July 2010, although terms under refinancing are expected to be unfavorable compared to those in the existing facility.”

Dubai World, one of the emirate’s three main state-owned business groups, said November 25 it would seek to delay repaying debt until at least May 30. The announcement sparked the biggest plunge in developing-nation stocks and the largest increase in emerging-market bond yields over US Treasuries in four weeks, while the cost to protect against a default by Dubai doubled.

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Simon 10 years ago

"its balance-sheet and cash-flow profile appear “sufficiently strong,” JPMorgan Chase & Co said...yet not strong enough to pay it contractors and 100% of its debt! JPM's opinion is not based on fact...given the noises being made about transparency by S&P and other ratings agencies...JPM says Dubai Holdings 'appears' to be strong...Not that it 'is' strong. Their message is nothing more than market noise to dupe people into thinking all in well and to keep investing in the markets. Maybe their message should have read..."its balance-sheet and cash-flow profile appear “sufficiently strong,” although not sufficiently strong enough to pay it contractors and 100% of its debt...JPMorgan Chase & Co said...that would have been more honest and specific.