Moody's Investors Service said on Wednesday that it has downgraded five Dubai government-linked companies, including Dubai Ports World, though the government would most likely bail them out if necessary. The issuer and debt ratings of international port operator DP World, state utility Dubai Electricity and Water Authority (DEWA) and DIFC Investments (DIFCI) all drop to A3 from A1, the credit ratings agency said.
Jebel Ali Free Zone (JAFZ) and Dubai Holding Commercial Operations Group (DHCOG) see their issuer and debt ratings fall to Baa1 from A3. The ratings outlook for DP World, DEWA, DIFCI and JAFZ is negative, Moody's said in a report. Issuer ratings for real estate giant Emaar Properties were maintained at Baa1, but its ratings remain on review for downgrade, along with those of DHCOG, the report said. "The main concern for Dubai going forward remains its high level of indebtedness, particularly that of its government-owned corporations," the report said.
"Whilst we understand that the government is under no legal obligation to support the vast majority of its GRI (government related issuers) debt, we believe that it is highly likely to stand behind its GRIs because of their strategic and reputational importance."
The government does not give data on the gross debt of the public sector in Dubai, a former real estate and financial boomtown, but most estimates put the debt at between 80 and 100 billion dollars, Moody's said.