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S&P FAQ Answers Queries On Dubai Gres’ Debt Maturities In 2012

"Risks linked to the weakening global economic outlook, the Arab Spring, and volatile equity and bond markets have raised concerns as Dubai GREs face large debt maturities and refinancing needs next year," said Standard & Poor's credit analyst Tommy Trask.

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December 26, 2011 12:18 by



Although the Dubai economy is beginning to bounce back, rated Dubai government-related entities are up against significant risks, said Standard & Poor’s Ratings Services in a report, “Dubai Government-Related Entities Face Debt Maturities And Refinancing Issues In 2012,” published today on RatingsDirect on the Global Credit Portal.

“Risks linked to the weakening global economic outlook, the Arab Spring, and volatile equity and bond markets have raised concerns as Dubai GREs face large debt maturities and refinancing needs next year,” said Standard & Poor’s credit analyst Tommy Trask.

Standard & Poor’s rates five Dubai-based companies that it considers to be GREs under its criteria: Dubai Electricity and Water Authority, DP World Ltd. ,Emaar Properties PJSC, DIFC Investments LLC, and Jebel Ali Free Zone (FZE). In our ratings, we factor in our view of the likelihood and extent of any extraordinary support that the Dubai government would provide to these GREs in the event of their financial distress. The results range from no uplift for DP World and Emaar to three notches of uplift for DEWA and DIFC Investments (see table).

We have received several questions from investors and market participants about the likelihood of government support and how we factor it into our ratings on these GREs. Here, we answer those questions.

– What are the main risks that Standard & Poor’s sees for the Dubai-based GREs it rates?

– How does Standard & Poor’s view the recent statements that Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal Committee, made on potential debt restructuring?

– When does Standard & Poor’s consider debt restructuring as tantamount to a default?

– How does Standard & Poor’s factor government support and ownership into its ratings on Dubai-based GREs?

– What is the time frame for the current negative and positive outlooks on the Dubai-based GREs that Standard & Poor’s rates?

– How does Standard & Poor’s view the default probability on bonds and sukuk compared with that of bank loans and trade related liabilities?



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