Standard & Poor's Ratings Services said it had taken rating actions on a number of Dubai-based government related entities (GREs) and transactions. Standard & Poor's has downgraded DIFC Investments LLC, DP World Ltd.,
Jebel Ali Free Zone (FZE), Dubai Holding Commercial Operations Group LLC (DHCOG), and Emaar Properties PJSC. All of these entities have been placed on CreditWatch with negative implications. The ratings on Dubai Multi Commodities Centre Authority (DMCC) were affirmed, although they were placed on CreditWatch negative. A CreditWatch negative placement also applies to the notes issued by Thor Asset Purchase (Cayman) Ltd. (Thor), which are securitized by cash flows from a revolving pool of existing and future receivables originated by Dubai Electricity and Water Authority (DEWA; not rated).
The rating actions are the result of the announcement on Nov. 25 of the restructuring of the debt obligations of Dubai World and its subsidiary, Nakheel. In its view, such a restructuring may be considered a default under Standard & Poor's Ratings Services default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity.
This has led to a downward reassessment of Standard & Poor's Ratings Services view of the propensity of the government of Dubai to support its GREs, resulting in multiple-notch downgrades on several rated GREs, in accordance with Standard & Poor's Ratings Services enhanced criteria for rating GREs.
The risk of a restructuring and/or default at Nakheel had previously led us to reassess the likelihood of government support, leading to downgrades in June 2009. In October 2009, Standard & Poor's Ratings Services reiterated its view that government support would need to be revisited in the event of a default at Nakheel.
Standard & Poor's Ratings Services will resolve the CreditWatch placement on the rated GREs and Thor upon a review of the full impact on rated GREs of the Dubai World and Nakheel restructuring announcement. Standard & Poor's Ratings Services expect this to be complete within the next three months.Global Arab Network