Moody's may cut six Dubai issuers

Moody's Investors Service said it has placed its issuer and debt/Sukuk ratings of six government-owned companies in Dubai on review for possible downgrade, including Dubai Holding Commercial Operations Group (rated A1), DP World (A1), DIFC Investments (A1), Dubai Electricity & Water Authority (A1), Jebel Ali Free Zone (A1) and Emaar Properties (A3).

Moody's said that its rating action was primarily motivated by the deterioration in Dubai's macro-economic outlook, adding that Dubai's open economy has been hit harder by the global economic and financial crisis than most others in the region, largely because of its higher leverage, concentration in cyclical sectors, and more limited fiscal resources.

Moody's highlighted that, despite all rated government-owned companies sharing similar challenges from their exposure to Dubai's and the global economy, individual companies have differing business plans, liquidity and financial flexibility to react to the new environment.

Moody's added that it believes that the liquidity of most of its rated issuers is sound, thus minimizing any potential calls - if any - on government funds from its rated entities.

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