Several Dubai Government-Related Entities Downgraded And On Watch Negative Following Debt Restructuring Announcement

Standard & Poor's Ratings Services said it had taken rating actions on a number of Dubai-based government related entities (GREs) and transactions (for full details see "Ratings List" below). Standard & Poor's has downgraded DIFC Investments LLC, DP World Ltd., Jebel Ali Free Zone (FZE), Dubai Holding Commercial Operations Group LLC (DHCOG), and Emaar Properties PJSC. All of these entities have been placed on CreditWatch with negative implications. The ratings on Dubai Multi Commodities Centre Authority (DMCC) were affirmed, although they were placed on CreditWatch negative. A CreditWatch negative placement also applies to the notes issued by Thor Asset Purchase (Cayman) Ltd. (Thor), which are securitized by cash flows from a revolving pool of existing and future receivables originated by Dubai Electricity and Water Authority (DEWA; not rated).

The rating actions are the result of the announcement on Nov. 25 of the restructuring of the debt obligations of Dubai World and its subsidiary, Nakheel. In our view, such a restructuring may be considered a default under our default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity.

This has led to a downward reassessment of our view of the propensity of the government of Dubai to support its GREs, resulting in multiple-notch downgrades on several rated GREs, in accordance with our enhanced criteria for rating GREs.