DIFC Investments in $1 billion revamp
Dubai, August 9, 2010
DIFC Investments, part of the group which operates Dubai's tax-free business hub, has begun a $1 billion-plus restructuring plan to divest non-core investments by the end of 2011, ratings agency Standard & Poor's said on Monday.
S&P assigned a negative outlook for the real estate and financial investments group but removed it from its CreditWatch status where it placed the company on November 25.
"Although we view this (restructuring) as a positive step with respect to DIFCI's creditworthiness, we think it involves execution risk," S&P said in a statement.
It said the company likely would need additional asset sales for it to be "self-sustainable", adding that its ratings also reflected a high debt level which stood at $3.1 billion at the end of 2009.
Rival ratings agency Moody's lowered its rating on DIFC Investments in July and said the probability of default was higher due to a lack of government support and concerns about Dubai's ongoing debt restructuring.
DIFC Investments is a wholly owned subsidiary of Dubai International Financial Authority and incorporates the commercial activities of Dubai's financial free zone, which is called the Dubai International Financial Centre (DIFC).
The DIFC tax-free zone hosts most of the foreign financial companies active in the Gulf.
It was set up by Dubai's government in 2002 in a bid to establish a financial centre that could rival the likes of Singapore and Frankfurt.
DIFC Investments posted a $562 million loss in 2009 due to writedowns related to the group's investment portfolio and warned market conditions would remain volatile. – Reuters