Dubai – Mubasher: Moody’s Investor Service affirmed its credit rating of state-owned services infrastructure provider Dubai Electricity & Water Authority (DEWA) at Baa1, while it downgraded its stable outlook to negative, according to a Friday statement.

The long-term issuer rating was based on linkages between DEWA and the Dubai government, Moody’s said.

The rating agency expected a mounting risk of a more structurally sluggish real gross domestic product (GDP) growth for Dubai and worsening fiscal strength of the government, due to higher debt levels.

DEWA’s credit profile is pegged to the economic and fiscal developments of Dubai, as its financial policies and governance are determined by the government, including investment decisions and shareholder returns.

The outlook revision indicated a risk that the government will raise transfers from government-related entities, including DEWA, for its sole operational exposure to Dubai, and its full ownership by the government.

A prolonged slowdown is expected in the non-oil sectors of the broader UAE economy, a potential drag on the Gulf nation’s revenue growth.

The London-based agency ruled out an upgrade to DEWA’s negative outlook currently, as any move would require an improvement in Dubai’s economic environment and a stable debt burden.

Moody’s also warned that the ratings could be downgraded in the event of further deterioration in Dubai’s economic conditions and debt.