Just fyi.. Arlyana Abubakar Senior Economic Analyst Foreign Debt Analysis and Investor Relation Division International Directorate Bank Indonesia
Publication: AME Info - Company News Provider: AME Info Date: February 2, 2009 (13:55) Moody's places Dubai Inc corporate ratings on review for downgrade Moody's Investors Service has today placed its issuer and debt/Sukuk ratings of six government-owned companies in Dubai on review for possible downgrade. The six companies affected are: 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 rating action was primarily motivated by the deterioration in Dubai's macro-economic outlook. 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 highlights 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 believes that the liquidity of most of its rated corporations is sound, thus minimising any potential calls -- if any -- on government funds from its rated entities. However, Moody's believes that material alterations will be required to reign in capital spending and thus match lower investments with lower expected cash flows over the medium term. Accordingly, flexibility to adjust corporate plans to reflect weaker global demand will be vital for long-term rating stability. While Dubai's economy is more diversified than regional rating peers, it is dependent on cyclical sectors such as real estate, tourism, trade, and financial services. All of these are being adversely affected by the tougher external environment. Furthermore, given its close linkages with regional oil exporters, Dubai's economy has been affected indirectly by the slump in international oil prices even though oil generates only a small portion of the emirate's GDP directly. Moody's continues to believe that the Dubai government is very willing to support the large and systemically important companies that it owns, should it be required. However, the government's capacity to support seems limited and is likely to be impaired by the worsening economic situation. Unlike most other governments in the GCC, notably that of its oil-rich neighbour Abu Dhabi, Dubai's government is not known to hold substantial offshore liquid assets that can potentially be tapped to finance fiscal deficits and bolster the operations of the wider public sector. Moody's is aware of the Dubai government's announcement in November that it held at least $90bn in assets. Yet the composition of these assets has not been revealed and therefore their liquidity cannot be taken for granted. A request for further information regarding these assets will form a core part of Moody's ratings review. Moody's would be reassured if a substantial portion of these assets were liquid and unencumbered, and therefore available should any government-owned company in Dubai require extraordinary assistance with debt repayments in either local or foreign currency. ________________________________ "This e-mail (including any attachments) is intended solely for the addressee and could contain information that is confidential; If you are not the intended recipient, you are hereby notified that any use, disclosure, copying or dissemination of this e-mail and any attachment is strictly prohibited and you should immediately delete it. This message does not necessarily reflect the views of Bank Indonesia. Although this e-mail has been checked for computer viruses, Bank Indonesia accepts no liability for any damage caused by any virus and any malicious code transmitted by this e-mail. Therefore, the recipient should check again for the risk of viruses, malicious codes, etc as a result of e-mail transmission through Internet.”
