Wednesday, December 9, 2009

HOT: Moody’s May Downgrade Swath of U.A.E. Companies

Spurred by the troubles in Dubai, Moody’s Investors Service put all government-backed companies in the United Arab Emirates, including those controlled by the oil-rich emirate of Abu Dhabi, on review for a possible downgrade Wednesday morning, according to Dealbook.

The rating agency said the review was prompted by a need to “re-validate, and possibly reconsider” assumptions following Dubai’s recent decision to explicitly segregate its direct obligations from those of its government-backed companies.

Moody’s said it had assigned high ratings for the government-backed entities on the view that there was a “very high implicit government support” if they every fell into trouble. If there was ever a problem in paying back the debt, Moody’s said, it had assumed that the government would not make a distinction between servicing its direct obligations and those of its state-owned companies.

But Dubai has undercut that view by declaring that the troubles affecting Dubai World were its alone and would not benefit from a government rescue.

Abu Dhabi’s state-backed companies placed on review include Abu Dhabi National Energy, known as TAQA; Mubadala Development; Tourism Development & Investment; International Petroleum Investment; Emirates Telecommunications; Dolphin Energy; and Aldar Properties. All remained investment grade as of Wednesday.

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