Standard & Poor's Ratings Services said today it assigned its 'A+' long-term corporate credit rating to the Emirate of Dubai-based real-estate developer and hotel operator Dubai Holding Commercial Operations Group LLC (DHCOG). The outlook is stable.
"The rating on DHCOG reflects the group's important role in the economic development of Dubai, and the 100% ownership by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the ruler of Dubai, and the vice president and prime minister of the United Arab Emirates," said Standard & Poor's credit analyst Alf Stenqvist. "The rating also reflects the group's well-established market position, good cash flows, low debt leverage, and strong asset base. The major offsetting factor is the risk of an economic downturn reducing demand for real estate and/or the potential oversupply of real-estate projects in the longer term."
At the end of 2005, the company had total debt of UAE dirham (AED) 6.7 billion ($1.8 billion), including loans to the parent company Dubai Holding LLC. Total debt is, however, expected to have doubled in 2006, reflecting debt-financed acquisitions of stakes in international telecommunications companies.
Standard & Poor's expects DHCOG will remain an important tool for real-estate development in Dubai, and that there will be no material changes in ownership and sovereign support. The outlook also assumes that DHCOG's financial profile will remain robust, and that upstream dividends to the parent company will be limited to a maximum 30% of cash proceeds from land sales.
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