Ratings agency Moody’s Investors Service has estimated Dubai’s bad debt is $25bn and it will need government support or the debt will need to be restructured.

Following the downgrade of five Dubai corporates on 4 November, the agency said the emirate and its operating companies would struggle to refinance these debts in current market conditions.

The debt includes $7bn associated with Dubai real estate company Nakheel and other debt raised by Dubai investment companies. The agency says the companies or investments for which this debt was raised, are now of questionable viability.

“This $25bn is our estimate of the debt within Dubai’s government-related companies that they would not be able to refinance in the current market without some sort of a guarantee,” says Philipp Lotter, Dubai-based corporate analyst at Moody’s.

Moody’s also estimates that Dubai has $50bn of debt due over the next three years.

The agency downgraded DP World, Dubai Water & Electricity Authority (Dewa), and DIFC Investments from A1 to A3. Dubai Holding Commercial Operations Group and the Jebel Ali Free Zone were downgraded from A3 to Baa1 (MEED 4:11:09).