Abu Dhabi’s Aldar Properties has been downgraded from A3 to Baa2 by ratings agency Moody’s Investors Service, as a result of the agency’s reassessment of the likelihood of the Abu Dhabi government providing financial support.

Moody’s says Aldar’s rating, which affects $2.3bn of rated debt, has been left on review for a further possible downgrade.

According to an agency statement on 28 January, the downgrade reflects the “expectation that unit and land sales volumes will be cumulatively much lower over the next 24-36 months than had originally been anticipated.”

The agency added that “any deviations from Aldar’s business plan in terms of cash flow receipts for commercial projects could expose the company to possible funding gaps beyond 2010 when loans and capital market debt originally incurred to finance commercial projects and investments, mature.”

Aldar is now just two notches above speculative grade or junk bond status. In May 2009, the company issued $1.25bn of bonds.