S&P, Moody's downgrade 5 Dubai govt entities

The global rating agencies S&P and Moody's have downgraded the credit ratings for several government-related entities in Dubai on fears about the government's failure to provide timely financial support to them.

Standard & Poor's Ratings Services and Moody's have downgraded the government entities after the oil-rich city-state government said it aims to restructure the existing debt of Dubai World, its largest and most diversified investment vehicle, and real estate developer Nakheel.

S&P has downgraded the ratings for five Dubai government related entities--DIFC Investments, DP World, Jebel Ali Free Zone (FZE), Dubai Holding Commercial Operations Group LLC (DHCOG),and Emaar Properties PJSC.

Moody's Investors Service also downgraded a total of six government-related issuers and left them on review for further possible downgrade. Apart from five entities downgraded by S&P, the one additional entity whose rating has been downgraded by Moody's is Dubai Electricity & Water Authority.

The rating agency said about its downgrading move "such a restructuring may be considered a default under our default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity."