Dubai bond bodes well for corporate ratings: Moody’s

Published Monday, February 23, 2009

By Reuters

Moody's Investors Service said on Monday the Dubai's government's $20 billion bond programme could support debt ratings of six Dubai companies that were placed under review for a downgrade earlier this month.

On Sunday, Dubai said it had sold $10 billion in five-year unsecured bonds to the United Arab Emirates Central Bank, carrying a fixed interest rate of 4 per cent per year.

If there are no restrictions on how Dubai uses bond proceeds this could support Moody's ratings of Emaar, DP World, DIFC Investments, Dubai Holding Commercial Operations Group, Dubai Electricity and Water Authority and the Jebel Ali Free Zone.

"Assuming that there are no such restrictions, this news is clearly supportive for the ratings of the six Dubai Inc. companies that are rated by Moody's," Moody's said in a statement.

"Our ongoing ratings review ... will consider to what degree the erosion of Dubai's intrinsic economic strength and the fundamental creditworthiness of each of the six ... is offset by the materialisation of financial support from the federal government."

The review is due to be completed "shortly", it said.

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