Moody's May Downgrade Emaar and Five Other Dubai Firms

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(DUBAI, UAE) -- Moody's Investors Service said yesterday it is looking at six major Dubai government companies to decide if their ratings should be downgraded. The companies include five of Dubai's biggest financial powerhouses and its largest developer, Emaar Properties.

Dubai Holding Commercial Operations Group, DP World, DIFC Investments, Dubai Electricity and Water, Jebel Ali Free Zone, and Emaar Properties are being reviewed "motivated by the deterioration in Dubai's macro-economic outlook."  According to the rating agency, "Dubai's open economy has been hit harder by the global economic and financial crisis than most others in the region."


No one from the six companies was willing or available to comment. Last week Emaar Chairman Mohamed Alabbar said that he expected property prices in Dubai to fall an average of 20 percent . He also said that the company was not looking to buy back shares but might delay some projects if market conditions continued to deteriorate.

In remarks published Saturday, the head of Dubai's Real Estate Regulatory Authority (RERA) said that the number of developers registered in the emirate has declined by 40 percent to 500. As recently as November, there were 800. Marwan bin Ghalita, RERA's CEO, added, "some of the companies were registered but have now decided they don't want to develop because of liquidity, which is a good thing."


Moody's said that if the six firms' ratings were downgraded, they would go down two notches at most which would leave them still with investment grade ratings. The government of Dubai has said in the past that it can support its big companies and claimed last year to have more than $90 billion in assets. However, the liquidity of the assets "cannot be taken for granted," Moody's noted, and it has asked for information about them as part of the ratings review.

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