DUBAI: Ratings agency Moody’s downgraded five Dubai state-linked entities including port operator DP World, citing concern over their access to government financial support. They also included Dubai Electricity & Water Authority (DEWA), DIFC Investments, Jebel Ali Free Zone (JAFZ) and Dubai Holding Commercial Operations Group (DHCOG).
“The government has reiterated that GRIs [government-related issuers] debt obligations … are not regarded as obligations of the government … and that the government is under no obligation to extend support to any such GRI,” Moody’s said in a statement on Wednesday.
The government has also tightened criteria to the recently established Dubai Financial Support Fund.
Moody’s said among these criteria are whether the GRIs are able to demonstrate sustainable business plans, the continuing support of their existing financial creditors and whether they have realistic prospects of fulfilling repayment obligations.
Dubai, one of seven members of the United Arab Emirates (UAE) federation, kick started a $20 billion bond program in February when it raised $10 billion from the UAE central bank, a move that calmed worries that the former Gulf boom town could default on billions of dollars in debt due for refinancing this year.
Moody’s said it assumes that the second $10 billion tranche will be funded imminently to further prop up the gradually depleting fund.
Ratings of DP World, DEWA, and DIFCI were downgraded to A3 from A1. DHCOG and JAFZ were downgraded to Baa1 from A3. – Reuters
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