Bankers and analysts said the downgrade of Emaar Properties ’rating will likely raise the emirate’s borrowing costs if it decides to refinance the $ 750 million of bonds due in October. < / p>
According to Reuters, investors usually consider the credit rating of government-related entities an indication of Dubai that is not subject to rating by any of the major credit rating agencies.
Standard & Poor's Global downgraded Emaar Properties, which has built Burj Khalifa in Dubai the tallest building in the world, to a high-risk BB + The BBB- investment grade mark, saying it expects the company's profits to fall between 30 and 40 percent this year.
The same taxonomic procedures also applied to Emaar Malls and the Dubai International Financial Center for Investments, a unit of the company that manages the Dubai International Financial Center, the main financial hub in the Middle East region.
Khaled Hawladdar, head of credit and sukuk consulting at RJ Fleming, said: “Emerging exposure to two of the largest sectors of the economy, retail and real estate, will naturally affect the credit situation.” For Dubai.
A fixed income analyst and fund manager said it might be possible to translate the rating measure on Emaar into an additional cost of around 25 basis points for Dubai if it decided to refinance its upcoming bonds.
Dubai Government's Finance Department declined to comment.
The Corona Virus crisis has hit vital sectors in the Middle East Business and Tourism Center almost completely stopped.
Last week, Standard & Poor's said it expects Dubai's economy to shrink 11 percent this year, which will be its biggest economic contraction since 1986, according to Datainactive. / p>
Sources told Reuters last week that Dubai was exploring a number of financing options to overcome the crisis this year, including a possible public bond issue.
(Amazon fun of knowledge)
