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Moody's reviewing DP World’s ratings for downgrade

Moody's reviewing DP World’s ratings for downgrade
DP World and the parent company will raise $9 billion debt
DP World
DPW
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Dubai – Mubasher: Moody's Investors Service has assigned on review DP World’s ‘Baa1’ long term issuer and senior unsecured ratings, as well as ‘(P)Baa1’ senior unsecured rating placed to the company’s Crescent Limited MTN programme.

This announcement came after DP World’s parent company Port and Free Zone World had offered to pay the 19.55% of the company’s shares trading on Nasdaq Dubai for around $2.7 billion and wholly own the company, according to a recent press release.

After concluding the transaction, the parent company and DP World will raise $9 billion debt to finance the minority buyout and distribute a cash dividend of $5.15 billion to Dubai World, the only shareholder of the parent company.

The two companies will also refund some coming debt maturities as well as DP World's outstanding convertible bonds.

Moody's vice president, senior analyst, and local market analyst for DP World, Dion Bate, remarked: "The proposed minority buyout and dividend payment to Dubai World will increase DP World's leverage well beyond Moody's guidance for a ‘Baa1’ rating and will lead to a material deviation from the groups self-imposed financial policy. The transaction will weaken the overall credit profile of DP World.”

The rating agency’s review will highlight DP World's consolidated credit metrics that include the parent company’s debt, the outcome of the minority offer and corresponding additional debt, as well as the restrictions that will limit further interference from the shareholders.