S&P drops DP World ratings at port operator's request
Wednesday, 16 May 2012 | 16:30
Standard & Poor's withdrew its credit rating on DP World after the ports operator objected to the way the agency assessed its financial health.
S&P said it pulled the ratings at DP World's request. The company, a profitable part of indebted conglomerate Dubai World , is rated investment grade by Moody's and Fitch.
The world's third biggest ports operator was rated 'BB/B' with a stable outlook by S&P, revised down in February from positive.
The agency said DP World's financial risk profile was "aggressive" and the company would generate negative free operating cash flow in 2012 and 2013.
It also withdrew its 'BB' issue rating - indicating an entity is less vulnerable in the near-term but faces major uncertainties in meeting financial commitments - and '3' recovery rating on the firm's senior unsecured debt.
Unpredictable global trade patterns and parent Dubai World's weak creditworthiness partially offset DP World's strength, S&P had maintained.
DP World said the ratings were not compatible with how its peers are assessed.
"It was felt the criteria S&P used for rating DP World is not an appropriate way of assessing the financial health of the company and the strong business profile of DP World," it said in a statement on Tuesday.
In March, the port operator said it would repay a $3 billion loan six months ahead of schedule. The payment would cut its total debt to approximately $4.7 billion.
In January 2010, Dubai's biggest bank by market value, Emirates NBD, dropped S&P as a rating company days after the agency withdrew its rating on a Dubai Holding unit.
Shares of DP World rose 0.5 percent at 0908 GMT on Nasdaq Dubai. The stock had dropped 4.3 percent on Monday.
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