S&P cuts credit ratings on two Dubai firms, cites weaker economy

S&P had previously upgraded Dubai Electricity and Water Authority in 2012 and 2016, as the emirate recovered from a credit crisis that nearly caused it to default on its debt. (AFP)
Updated 06 September 2018
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S&P cuts credit ratings on two Dubai firms, cites weaker economy

  • The emirate does not have a sovereign credit rating, so analysts often look at state firms as indicators of its financial health

DUBAI: S&P Global Ratings cut its credit ratings for two Dubai state-owned companies, saying a weakening economy in the emirate was hurting the government’s ability to extend emergency support to the firms if needed.
The downgrades were a fresh sign of pressure on Dubai’s economy, where the real estate and equity markets are slumping. The emirate does not have a sovereign credit rating, so analysts often look at state firms as indicators of its financial health.
S&P lowered its rating on utility Dubai Electricity and Water Authority (DEWA) late on Tuesday to BBB from BBB-plus, assigning it a negative outlook, which indicates a significant chance of a further downgrade in future.
It was S&P’s first outright downgrade of DEWA. The agency had previously upgraded the company in 2012 and 2016, as the emirate recovered from a credit crisis that nearly caused it to default on its debt. A default was averted with $20 billion of aid from neighboring Abu Dhabi.
S&P also lowered its rating for real estate firm DIFC Investments (DIFCI) to BBB-minus, one step above junk status, from BBB, but with a stable outlook. DIFCI owns an office and retail complex in Dubai’s international financial center.
Analysts say that the pressures on Dubai are not as serious as those it faced a decade ago, and it has strengthened its finances since then by restructuring billions of dollars of debt at state-linked firms.
Dubai government bond prices and the cost of insuring Dubai sovereign debt showed little reaction on Wednesday to the S&P downgrades.


Saudi Aramco signs joint venture for refining and petrochemical complex in China

Updated 2 min 20 sec ago
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Saudi Aramco signs joint venture for refining and petrochemical complex in China

  • The partners will create a new company, Huajin Aramco Petrochemical Co. Ltd., as part of the project
  • Saudi Aramco will supply up to 70 percent of the crude feedstock for the complex

DUBAI: Saudi Aramco on Friday signed an agreement to form a joint venture with NORINCO Group and Panjin Sincen to develop a fully integrated refining and petrochemical complex, located in the city of Panjin in the Liaoning province of China.
The partners will create a new company, Huajin Aramco Petrochemical Co. Ltd., as part of a project that will include a 300 thousand barrel per day refinery with a 1.5 million metric tons per annum (mmtpa) ethylene cracker and a 1.3 mmtpa PX unit. Saudi Aramco will supply up to 70 percent of the crude feedstock for the complex, which is expected to start operations in 2024.
Saudi Aramco CEO Amin Nasser, in a statement, said: “Our agreement today with NORINCO and the Liaoning province is a clear demonstration of Saudi Aramco’s strategy to move from beyond a buyer-seller relationship, to one where we can make significant investments to contribute to China’s economic growth and development. Our participation in the integrated refining and petrochemical project in Panjin will strengthen our collaborative efforts to enhance energy security, revitalize key growth sectors and industries in Liaoning and also meet rising demand for products and goods in China’s Northeast region.”
There are additional plans to establish a fuels retail business, which will further integrate into the value chain. By the end of 2019, a three-party Marketing JV Company is expected to be formed between Saudi Aramco, North Huajin and Liaoning Transportation Construction Investment Group Co., Ltd. to develop a retail fuel stations network in the target markets.