Ratings company confirms lowering the Dubai based companies ratings to BB from BB+.
DP World Ltd, Dubai Multi Commodities Centre and Emaar Properties had their credit ratings cut by Standard & Poor’s, which said the state owned companies are unlikely to receive “extraordinary” support from the government .
DP World, the Middle East’s biggest port operator, and Emaar Properties, the builder of the world’s tallest tower, were lowered to BB from BB+, S&P said in an emailed statement today.
Dubai Multi Commodities, the state owned tax free business park in the UAE, had its credit rating reduced to B from B+.
In a statement, Trevor Pritchard, a London based analyst at S&P, said: “We do not incorporate into the ratings on these entities any expectation of extraordinary support from the government of Dubai."
The economy of Dubai, the second biggest of the seven states that make up the UAE, was battered by the global crisis as credit markets seized up and real estate prices plunged.
The slowdown forced Dubai World, one of the emirate’s state owned business groups, to say on Nov 25 that it was seeking to postpone debt repayments.
It is now in negotiations with banks to restructure about $22 billion in debt.
Dubai may need further assistance from its wealthier neighbor Abu Dhabi after getting $20 billion last year.
Other sources of credit will be harder to tap after Dubai and its state controlled companies amassed $109 billion in debt to turn the Arabian Gulf city state into a financial and tourism center as oil reserves dwindled.
Moody’s Investors Service earlier today removed the junk credit rating of DP World from further downgrades as Dubai’s proposals to restructure the parent company alleviated concerns.
Moody's said: “The recent restructuring proposal for the parent company has shown a renewed public commitment to safeguard healthy subsidiaries of Dubai World, including DP World, from any adverse actions from the parent."
All UAE Gov. owned entities, or where any of the seven Emirates' governments owns a considerable share in an S&P rated public or private entity, should stop dealing with this sham of a rating agency (S&P).
Yes, this company is a complete sham for downgrading UAE gov-owned entities. Of course, when they upgrade their ratings, it's a different issue.