Moody's: Dubai liabilities rising

Moody's Investors Service said it said in a new report that Dubai's corporatist business model has played a central part in the emirate's economic transformation over the past decade.

At the same time, a systemic increase in debt to finance this transformation has resulted in growing contingent liabilities to the government, the agency said, and the need for greater analytical emphasis on federal support when assessing creditworthiness amongst Dubai government-owned entities.

In realizing Dubai's growth program, the city is run according to a corporatist model, which has proved successful to date, Moody's said.

However, cumulative liabilities are currently rising faster than investments are able to generate returns, which increases Dubai's medium-term susceptibility to execution risks and necessitates a clear understanding of wider implicit federal support when rating key government-backed corporates, the agency said.

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