LONDON, 26 May 2007 — Standard & Poor’s Ratings Services said yesterday that it has assigned its ‘A+’ long-term and ‘A-1’ short-term issuer credit ratings to DIFC Investments LLC. The outlook is stable.
DIFC Investments manages the Dubai International Financial Center’s (DIFC) revenue-generating operations, which can broadly be subdivided into leasing and investments. DIFC itself is the vehicle through which Dubai proposes to position itself as a regional and world financial hub. DIFC is well placed to take advantage of the financial intermediation opportunities that have arisen as a result of the surge in oil prices and regional liquidity in recent years, for example through the Dubai International Financial Exchange (DIFX), part of DIFC, which aims to attract issuers and dual-listing companies from beyond the region to tap into the liquidity generated in the region.
“The ratings on DIFC Investments are supported first and foremost by the strong, ongoing backing of the government of Dubai,” said Standard & Poor’s credit analyst Ben Faulks. In creating DIFC, the government allocated, for free, 110 acres of prime land in central Dubai to establish the physical infrastructure it required.
The government has since facilitated the provision of the necessary accompanying municipal services such as roads, electricity, and water. The law governing DIFC stipulates that DIFCA (later commuted to DIFC Investments) will have an independent budget but that the government will provide enough funds for this purpose. Payment of dividends to the government is not required under the law governing DIFC, though will be made if the government so requests.
The stable outlook on DIFC Investments reflects the likelihood of ongoing support from the government of Dubai.
“As the stand-alone creditworthiness of DIFC Investments is in our view somewhat less than that of the government, any indication that the government’s commitment to DIFC is weakening would result in a deterioration of the credit rating,” Faulks said.
