Moody’s on Tuesday downgraded ratings on all six Dubai government-related issuers (GRIs) amid continuing concerns over Dubai World’s plan to reschedule debts worth $26bn.
The ratings agency said its decision “follows recent comments and statements from government officials, which cause us to believe that no meaningful government support should be assumed for any entity that is not directly part of or formally guaranteed by the government”.
As a result, Moody’s said it had reduced the government support assumptions for all six issuers – DP World, Dubai Electricity & Water Authority (DEWA), DIFC Investments (DIFCI), Jebel Ali Free Zone (JAFZ), Dubai Holding Commercial Operations Group (DHCOG) and Emaar Properties.
“All ratings now reflect the respective company’s stand-alone credit profile (baseline credit assessment) with the exception of Dubai Electricity & Water Authority (DEWA) and DIFC Investments, whose revised ratings include one-notch uplift for government support recognising their stronger strategic linkage to Dubai’s core economic development policies,” Moody’s said in a statement.
Moody’s added that all ratings remained on review for further downgrade.
“In recent statements [on Dubai’s debt issues] the government has highlighted that it sees no legal obligation to support non-guaranteed debt of its GRI’s,” the agency said in a report.
“Taking into account the government’s most recent position, Moody’s no longer believes it appropriate to assume timely support that results in any uplift for the ratings of four of the GRIs,” it added.
Moody’s said it viewed the probability of support for DEWA and DIFC as being diminished but sufficient to lift their ratings by one notch.
The last rating action on Dubai’s corporate GRIs was on November 26 when Moody’s downgraded ratings of DP World, DIFC Investments, DEWA, JAFZ, Emaar and Dubai Holding Commercial Operations Group.
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