Dubai Holding unit 'credit neutral for now'
Dubai, December 1, 2010
The refinancing negotiations between Dubai Holding Commercial Operations Group (DHCOG) and three banks about an extension of its $555 million revolving credit facility do not currently have any credit implications, says Moody's Investors Service.
However, the rating agency says it is monitoring the negotiations ahead of the conclusion of the final commercial terms for this facility before year-end.
The B2 corporate family rating (CFR) and B3 probability of default rating (PDR) of DHCOG are currently under review for possible downgrade, the ratings agency said in a statement.
Moody's comment is in response to Wednesday's statement by DHCOG saying that it has obtained a further extension of its revolving credit facility until December 30, following two earlier extensions in July and September.
Moody's said it will assess the final terms of the facility and its impact on the group's debt maturity profile, and the ranking in its debt structure, and any impact on the position of bondholders, before concluding its ongoing ratings review.
Moody's also cited the recent comments by senior Dubai government representatives who acknowledged that DHCOG's parent, Dubai Holding (DH), was facing financial challenges.
Moody's rates DHCOG separately from DHIG, the financial investment arm of DH, and no disclosure is provided on this side of the business. Consequently, Moody's ratings assume that both entities are managed in strict isolation of each other.
The last rating action was on June 30 when Moody's downgraded to B2 from B1 the senior unsecured issuer and debt ratings of Dubai Holding Commercial Operations Group.
At the same time, Moody's has also converted DHCOG's B2 issuer rating into a B2 corporate family rating (CFR) and assigned a probability of default rating (PDR) of B3.
DHCOG is a wholly owned subsidiary of Dubai Holding and incorporates all the non-financial investment businesses of the group, essentially incorporating real estate and hospitality businesses as well as free zones in Dubai.-TradeArabia News Service