Moody's cuts Dubai Holding to A3

Moody's Investors Service said it downgraded the ratings of Dubai Holding Commercial Operations Group to A3 from A2 and placed the ratings on review for possible further downgrade. The Baa1 ratings of Emaar Properties PJSC also were placed on review for downgrade.

The actions reflect Moody's views of continued fundamental challenges to both companies' business and financial profiles in the wake of difficult conditions on Dubai's property market, despite a recent announcement to merge both entities.

While Moody's said it acknowledges that Dubai's property market seems to have largely bottomed out, the financial and structural implications of its decline have taken its toll on both companies' debt protection metrics.

Further weakening is expected before the full effects of market recovery translate into stronger cash flows, the agency said.

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