Moody's puts UAE GRI ratings under review for downgrade, including Abu Dhabi

Published December 15th, 2009 - 10:56 GMT

UAE. Moody's Investors Service placed ratings of government-related issuers in the United Arab Emirates, including from Abu Dhabi, on review for possible downgrade, the agency said on Wednesday.

"The review was prompted by a need to re-validate, and possibly reconsider our support assumptions following Dubai's recent decision to explicitly segregate its direct obligations from those of its GRIs (government-related issuers), following which a decision was subsequently made to pursue a debt restructuring at Dubai World," Moody's said in a statement.

A shock announcement by Dubai on November 25 that it sought a repayment freeze on billions of dollars worth of debt at its flagship conglomerate hit investor sentiment, sending the emirate's credit default swap prices sharply up.

The Dubai government has said it would not bail out debt-laden Dubai World, trying to ring-fence profitable firms from its US$26 billion restructuring, but the debt woes has already led to credit downgrades for all government-linked firms.

Moody's said its move includes all entities that are owned by either the federal UAE government, or the government of the oil-rich emirate of Abu Dhabi.

It added the ratings under review benefit from very high implicit government support assumptions and assume that even in most potential stress scenarios the government will not make a distinction between servicing its direct obligations and those of its state-owned companies.

Issuers whose ratings were placed on review for downgrade included Abu Dhabi National Energy Company, TAQA, Mubadala Development Company, Tourism Development & Investment Company, International Petroleum Investment Company with Aa2 ratings.

Emirates Telecommunications Company, Etisalat, with Aa2 rating, Dolphin Energy with Aa3 rating and Aldar Properties  with A3 were also included.

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