International ratings agency Moody’s confirmed the Ba1 issuer and sukuk ratings of DP World, with a stable outlook on 7 April, completing the review initiated on 8 December 2009.
“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,” says Moody’s.
“Furthermore, 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.”
On 25 March, the government of Dubai announced it would inject $9.5bn into its Dubai World conglomerate and property subsidiary Nakheel.
Under the proposals for the Dubai World restructuring, the government wants to recapitalise the company and its own $8.9bn claim will be put on an equal footing with other creditors.
However, creditors are yet to agree to the plan.
In December last year, Moody’s lowered DP World’s ratings to Ba1 and placed them on review for downgrade both as a result of wider reductions in government support factored into the ratings of all Dubai government-related issuers (GRIs), and concerns surrounding the restructuring of Dubai World.
DP World reported a resilient financial performance for 2009 despite a decline in consolidated volumes by 8 per cent. The company has recorded a 4 per cent increase in volumes for the first two months of 2010 and Moody’s expects this trend to continue as the global recovery in trade volumes gains momentum.
The ratings agency says it “also takes comfort from the company’s strong liquidity position, with approximately $2.9bn of cash available at the end of 2009”.