Ratings agency Moody’s has downgraded five Dubai firms as it increases the distinction between the emirate’s government and its corporate subsidiaries.

This follows the government’s written announcement for a $2bn sukuk issue. It was “under no obligation to extend support to any government-related entity”, according to the documentation.

Moody’s also says the downgrades reflect increased understanding of the criteria by which Dubai will assist these companies financially using the Dubai Financial Support Fund. These include “whether [the companies] are able to demonstrate sustainable business plans, the ongoing support of their existing financial creditors, and realistic prospects of fulfilling their repayment obligations.”

The move affects DP World, Dubai Water & Electricity Authority (Dewa), and DIFC Investments, which have been downgraded from A1 to A3, and Dubai Holding Commercial Operations Group and the Jebel Ali Free Zone have been downgraded from A3 to Baa1.

All the ratings remain investment grade and “substantially above those that would be based on the entities standalone credit quality”.

The issue of a $2bn sukuk by the Dubai government has led to some optimism about the government and corporate sectors ability to deal with debt estimated to be about $80bn. But Moody’s says it remains concerned about the high level of indebtedness, particularly because $50bn of Dubai’s liabilities are estimated to be due in the next three years.