Ratings agency Moody’s has downgraded several key Dubai government-backed companies to junk status following the announcement that Dubai World was asking creditors for a six month delay in repayments.
Moody’s has downgraded the Jebel Ali Free Zone, Dubai Holding Commercial Operations Group, Emaar Properties and DIFC Investments to junk status. It has also downgraded Dubai Water & Electricity Authority (Dewa) and DP World to Baa2, two notches above junk.
Moody’s said in a statement, “A restructuring of its [Dubai World’s] obligations would indicate that the government is prepared to allow a government-related issuer to default on its obligations — a precedent that needs to be interpreted accordingly for those companies that are rated by Moody’s.”
Standard & Poor’s downgraded DIFC Investments, Emaar, DP World and Jebel Ali Free Zone to BBB-. It has also downgraded Dubai Holding Commercial Operations Group to BBB+. It added that the restructuring of Dubai World and Nakheel’s debt “may be considered a default”.
Fitch Ratings has also downgraded Dubai Holding Commercial operations Group and Dewa to BBB- from A-, and placed them on negative outlook.