UPDATE 1-Moody's downgrades Dubai's DIFC Investments
* Downgrades debt rating to B3 from B2
* Cites govt support concerns and level of debt
DUBAI, July 8 (Reuters) - Ratings agency Moody's lowered its rating on Dubai's DIFC Investments and said the probability of default was higher due to lack of government support and concerns about Dubai's ongoing debt restructuring.
"DIFCI's downgrade reflects the group's highly leveraged financial profile, its expected heavy reliance on asset disposals in the coming 12-24 months ... and its continued negative free cash flow generation," said Niel Bisset, senior vice president at Moody's in London in a statement.
Moody's said the downgrade also reflected the "significant impairments" in DIFCI's real estate portfolio which contributed to its 2009 loss.
DIFC Investments is a wholly owned subsidiary of Dubai International Financial Authority and incorporates the commercial activities of Dubai's financial free zone, which is called the Dubai International Financial Centre (DIFC).
DIFC, a tax free business hub, hosts most of the foreign financial companies active in the Gulf.
It was set up by Dubai's government in 2002 in a bid to establish a financial centre that could rival the likes of Singapore and Frankfurt.
Dubai announced a shock standstill last year on repaying some $26 billion in debt as it restructured flagship conglomerate Dubai World [DBWLD.UL]. It has since unveiled a $9.5 billion rescue plan for the unit.
Analysts say the focus of investor concerns has now shifted to debt troubles at the matrix of government-linked entities commonly known as Dubai Inc, though no state-linked unit has defaulted yet.
DIFC Investments posted a $562 million loss in 2009 due to writedowns related to the group's investment portfolio and warned market conditions would remain volatile. [ID:nLDE6410BB]
Moody's retains a negative outlook on DIFCI ratings to reflect the company's debt burden and its liquidity profile, it said in the statement. (Reporting by Rachna Uppal; Editing by Dinesh Nair and Jon Loades-Carter)
- Tweet this
- Share this
- Digg this
- Malaysian plane presumed crashed; questions over false IDs |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- WRAPUP 2-Malaysian plane presumed crashed; questions over false IDs
- Libya threatens to bomb North Korean tanker if it ships oil from rebel port
- Warning shots fired to turn monitors back from Crimea |