DMCC, S&P in war of words after rating withdrawal

DMCC believes 'CreditWatch' rating unfair as it has paid off debt

Dubai Multi Commodities Centre Authority is embroiled in a war of words with Standard & Poor’s after the ratings agency said that DMCC will face cash flow problem this year.

S&P also on Saturday withdrew DMCC rating on the company’s request. Prior to withdrawal, the ratings agency reviewed the long-term rating and maintained it on CreditWatch.

But DMCC believes that S&P’s decision is unjustified as it had paid off the last installment of its $200 million debt in May 2010. But S&P said it was “uncertain about the future earnings capacity of its core business, expecting negative cash free flow during 2010.

Standard & Poor's credit analyst Tommy Trask said: “We continue to have concerns about the company's net cash consumption over coming months and its sizable trade payables. However, at the time of the withdrawal, DMCC had repaid all rated debt. We understand that the group repaid its sukuk in May 2010 and has no other commercial debt outstanding. DMCC is a relatively young company, so we are uncertain about the future earnings capacity of its core business. We expect DMCC to generate negative free cash flow in 2010.”

Malcolm Wall Morris, CEO of DMCC, said business registrations has gone up by 40 per cent this year and there was sufficient cash to complete infrastructure work at Jumeirah Lakes Towers.




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