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.


VW to stop doing business in Iran: Bloomberg

Updated 20 September 2018
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VW to stop doing business in Iran: Bloomberg

  • VW will still be able to do some business in Iran under a humanitarian exception
  • VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years

WASHINGTON: Volkswagen has bowed to American pressure stemming from the US rejection of the multi-party nuclear deal and will end almost all business in Iran, Bloomberg News reported Wednesday.
The accord was reached Tuesday after weeks of talks between the German auto giant and the administration of President Donald Trump, said Richard Grenell, the US Ambassador to Germany, according to Bloomberg.
VW will still be able to do some business in Iran under a humanitarian exception, Bloomberg added.
In May, Trump pulled the US out of the deal it reached with Iran and five other countries in 2015. That accord lifted sanctions against Tehran in exchange for restrictions on its nuclear program.
Now, the US is reimposing those sanctions.
Bloomberg said VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years.