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Tuesday, February 24, 2009

Moody's-Dubai bond cld bode well for corp. ratings

DUBAI, Feb 23 (Reuters) - Moody's Investors Service said on Monday the Dubai's government's $20 billion bond programme could support debt ratings of six Dubai companies that were placed under review for a downgrade earlier this month.

Moody's said on Feb. 2 it was considering downgrading its debt ratings of six Dubai companies, including DP World (DPW.DI) and Emaar Properties EMAR.DU, due to the escalating global financial crisis.

On Sunday, Dubai said it had sold $10 billion in five-year unsecured bonds to the United Arab Emirates central bank, carrying a fixed interest rate of 4 percent per year.

If there are no restrictions on how Dubai uses bond proceeds this could support Moody's ratings of Emaar, DP World, DIFC Investments, Dubai Holding Commercial Operations Group, Dubai Electricity and Water Authority and the Jebel Ali Free Zone.

"Assuming that there are no such restrictions, this news is clearly supportive for the ratings of the six Dubai Inc. companies that are rated by Moody's," Moody's said in a statement.

"Our ongoing ratings review ... will consider to what degree the erosion of Dubai's intrinsic economic strength and the fundamental creditworthiness of each of the six ... is offset by the materialisation of financial support from the federal government."

Moody's had said it could lower its debt and Islamic bond, or sukuk, ratings for the six firms, all linked to the Dubai government, by as much as two notches each. The review is due to be completed "shortly", it said.

Citing a deterioration in the regional macroeconomic outlook, Moody's said Dubai had been hit harder than other economies in the oil-exporting Gulf region. Oil prices have slumped more than $100 a barrel since a peak last July.

Moody's current ratings for all of the Dubai companies except Emaar is A1. Its rating for Emaar is A3. (Reporting by Daliah Merzaban; Editing by Chris Pizzey)

Source : Reuters

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