We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 7 Apr 2010 09:25 PM

Font Size

- Aa +

Moody's removes downgrade threat from DP World

Ratings agency could even raise its rating if operating environment continues to improve.

Moody's removes downgrade threat from DP World
RATINGS DOWNGRADE: Credit ratings agency, Moodys, said that it was no longer considering an immediate downgrade to its ratings on ports operator, DP World. (Getty Images)

Credit ratings agency Moody's said it was no longer considering an immediate downgrade to its ratings on ports operator DP World, saying contagion from its parent company Dubai World was no longer a threat.

Moody's said it could even raise its rating on DP World if the operating environment continued to improve and if a potential creditor settlement with its parent company, Dubai World, led to stability.

Moody's said: "For this to occur, Moody's would also expect the company to continue to balance its growth aspirations with the need to conserve cash, and maintain its financial profile within key financial parameters."

Moody's had lowered DP World's ratings to Ba1 in December and warned that it was considering downgrading again, citing a lack of government support and concerns regarding the restructuring of Dubai World.

On March 25, the Dubai government unveiled a $9.5 billion restructuring plan for its debt laden Dubai World conglomerate in a plan to give bank lenders their money back in five to eight years and repay two key bonds.

In a statement released on Wednesday, Moody's said: "Over recent months, and most recently in the announced restructuring proposal for Dubai World, many of our concerns regarding the possible contagion of the parent company's financial difficulties on DP World have been alleviated."

It added: "As a result, Moody's believes that further negative rating actions on DP World should now be contained."

The Dubai government had previously said DP World's assets were ring fenced from any potential claims by creditors and the company was not part of the broader restructuring plan.

DP World is one of the largest port operators in the world and is 77 percent owned by Dubai World.

Moody's stated that DP World's 2009 financial performance was "resilient" despite seeing net profit from continuing operations fall to $333 million from $621 million in 2008.

In its earnings report, DP World had said it was seeing signs of recovery and raised its dividend by 19 percent. (Reuters)

Arabian Business: why we're going behind a paywall

For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.