Fitch puts DP World on negative watch

Fitch Ratings said it placed DP World plc’s long-term issuer default rating of BBB+ on rating watch negative.

The rating action follows the recent announcement that DP World’s parent company, Port and Freezone World FZE plans to buy back the 19.55% minority shareholding in DP World, take the company private and re-leverage the group. This debt-funded transaction is likely to significantly increase Fitch-adjusted net debt to EBITDAR in 2020.

“The group is strongly committed to bringing pre-IFRS net debt to adjusted EBITDA down to below 4x in the next two to three years. In our view, DP World has extensive balance sheet flexibility to deleverage and we expect it to maintain its investment-grade ratings. However, we note that there is still limited visibility and execution risk on its deleveraging plan,” said Fitch in a press release.

Fitch said it will resolve the RWN when the transaction is concluded and will have more visibility on the group’s deleveraging plan and medium-term capital structure.

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