Global Arab Network | Fitch Rates Dubai Electricity and Water Authority's bn Notes 'BBB-'

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Fitch Rates Dubai Electricity and Water Authority's $1bn Notes 'BBB-'

Global Arab Network - - Mohammed Almasri

Friday, 16 April 2010 11:31

Fitch Ratings has today assigned Dubai Electricity and Water Authority's (DEWA) USD1bn notes a senior unsecured rating of 'BBB-' and placed them on Rating Watch Negative (RWN). The notes are due in 2015 and bear a coupon of 8.5%. They were issued under DEWA's USD3bn global medium-term note programme, which is also rated 'BBB-' and on RWN.

The notes rank equally with all other outstanding unsecured and unsubordinated obligations of DEWA and are subject to a negative pledge and a cross default provision (related to an event of default on an amount exceeding USD40m). The notes have a put option related to a change of control of DEWA. The notes' documentation also places a limitation on the incurrence of indebtedness (at 2.5x consolidated EBITDA/interest expense or more for the two most recent consecutive six-month periods) and on dividend payments (equal to or less than 50% of consolidated net profit for the relevant year).

Issue proceeds are expected to be used for general corporate purposes.

The issue rating is in line with DEWA's Long-term Issuer Default Rating of 'BBB-', which is also on RWN. DEWA's ratings remain aligned with the creditworthiness of Dubai in accordance with Fitch's parent subsidiary methodology. DEWA's ratings are also supported by its monopolistic market position, improving efficiency levels and modern asset base.

Global Arab Network

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