Moody's downgraded the Dubai Electricity and Water Authority rating to Baa2 from Baa1 and maintained a negative outlook .
According to Reuters, many investors view the ratings of entities associated with the government of Dubai as an indication of the government's credit status, as none of the major credit rating agencies classify Dubai itself. .
The ratings agency said in a report that Moody's expects that the outbreak of the Corona virus will exacerbate the structural slowdown in the growth of the real GDP of the Emirate of Dubai, which will contribute to further deterioration of strength. Finance the government by raising levels of debt.
The reduction is also due to the risk of sustaining huge profit transfers from the authority to the Dubai government as a result of the declining economic and financial strength of the Emirate.
Moody's said that DEWA's financial policies and management that are under the control of the Dubai government may fundamentally affect its credit standing.
She said that the authority paid the government of Dubai profits of 4.5 billion dirhams (1.23 billion dollars) last year, compared to one billion dirhams in 2018.
Despite the cuts and negative outlook, Moody's said that the authority has benefited from a strong business climate and financial conditions and expected to generate 8.5 billion dirhams in cash from activities over the next year.
Alongside liquidity and cash equivalents of 11.8 billion dirhams at the end of 2019, Moody's said that the authority would have sufficient liquidity to cover debt liabilities of 6.2 billion dirhams and capital spending of about two billion dirhams And a dividend of 3 billion dirhams.
The agency said Moody's considered Dubai Electricity and Water Authority a borrower linked to the government and its credit status is linked to economic and financial developments in the Emirate of Dubai.
