A UAE publisher was ordered to pay Dh18.7 million to the game creator, ending a seven-year legal battle
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DP World, the world’s fourth largest container port operator, and industrial park Jebel Ali Free Zone, were cut two notches to ‘BBB’. Dubai Multi Commodities Centre Authority was downgraded by a level to ‘BB.’
S&P said its ratings reflect its re-appraisal of the likelihood of extraordinary financial support by the Dubai government to ensure the timely repayment of their debts.
“This reappraisal is the result of the increased uncertainty regarding the government’s willingness to provide support” support to state firms in fulfilling their debt service requirements, said S&P. The credit rating agency’s view has shifted since the last review in April when its assumption was that the Dubai government, without a doubt, will support distressed government companies, Farouk Soussa, S&P head of Midle East said in a call conference.
“The likelihood of support from government is very high, but that is different from saying the likelihood of support is certain.”
He said the debt burden of “Dubai Inc.” is extremely high.
“The repayments due are considerable in the next couple of years. The current resources available to government are sufficient for the next couple of years, but these too would be exhausted in the next couple of years, despite the (fact that) its ability to repay debts of its government-related entities is still strong.”
Dubai government-owned companies have borrowed about $80 billion over the years to fund its major projects aimed at developing the emirate into a regional tourist and financial centre. The global crisis, which has taken a turn for the worse last year, has left these companies in dire financial straits, as many of them struggle to refinance the estimated $10 billion in loans due this year.
Previously, S&P said that goverment-owned investment group Dubai World, could be forced to restructure a $3.5 billion bond issued by property Nakheel PJSC. In April, it placed six government-related companies on credit watch.
The Dubai government will have to make very tough choices going forward, said Soussa. “It’s also a question of what support will it provide to these companies. Will it be for debt repayments, or to provide them liquidity to support working capital?”
Soussa said that ultimately, the Dubai government will be able to raise money through various means, especially from the federal government. In re-rating the government-owned companies, Soussa said S&P based it largely on the role the company plays in the economy and the extent of its links to the government.
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