RIYADH, (Reuters) – Dubai’s government-linked entities may be spared further major ratings downgrades in the near future, an analyst for Moody’s said on Wednesday, in a sign that the emirate may be recovering from its credit woes.
A string of bruising ratings downgrades to government-linked firms were triggered after state-owned conglomerate Dubai World said in November it would seek a standstill on billions in debt repayments.
“In terms of ratings, I think we have seen the worst in terms of notches down and if there is any rating migration I would not expect it to be of a similar magnitude,” Martin Kohlhase, analyst for corporate finance at Moody’s told reporters on the sidelines of a financial conference.
Several entities including major banks, investment companies and free-zones were downgraded on concerns that Dubai’s credit environment had deteriorated to the extent that state support for these companies could not be guaranteed.
Dubai Holding, the investment vehicle of the ruler, is also said to be considering restructuring some of its loans, according to reports.
One of the companies units, Dubai Holding Commercial Operations Group (DHCOG), delayed reporting its annual earnings for the second time earlier this week, due to complexities in consolidating results of its units.
Kohlhase said Moody’s was “comfortable” with ratings for Abu Dhabi government linked entities.