S&P ratings agency upgrade boosts DP world

DP World, Dubai's ports and logistics group, has received a major boost with an upgrade from the ratings agency Standard & Poor's (S&P).

The agency has revised its outlook on DP World from "negative" to "stable" in light of the successful resolution of the restructuring process at Dubai World, the conglomerate that owns the ports company.

The upgrade is a significant development for DP World, which is planning a listing on the London Stock Exchange early next year. Some analysts are expecting the firm to raise new capital in the listing, or for the parent company to sell some of its 78 per cent stake.

At the same time, S&P is maintaining its long and short-term credit ratings on DP World at "BB/B", the agency said.

"The outlook revision and rating affirmation reflect our view that the risk of a negative impact on DPW's creditworthiness as a result of the debt restructuring of its majority parent, Dubai World, has decreased," said S&P's credit analyst Karim Nassif.

In addition, the upgrade reflects S&P's view of a likely improving trend in DP World's financial and operating performance on that achieved in the first six to nine months of this year, he added.

"The stable outlook reflects our expectation that Dubai World's track record over the past year of no negative interference will continue," Mr Nassif said. "It also reflects our belief that DPW's financial performance will continue to improve and this will be reflected in an improvement in credit metrics," he added.

In addition, S&P said it assumes DP World would shortly start a process to successfully refinance a US$3 billion (Dh11.01bn) loan facility due in October 2012.

Last month DP World, in its first move into international debt markets for almost three years, issued a revised prospectus allowing it to tap a bond facility to pay down borrowings.

S&P's rating on DP World reflects the company's stand-alone credit profile, which illustrates the company's "strong position as a major container port operator, with a highly diversified and expanding portfolio of ports and about 75 per cent of cargo handled being origin-destination traffic", the agency said.

The agency said it would downgrade the ratings again if there was any evidence of negative interference from Dubai World, or if the financial position did not improve as expected.

fkane@thenational.ae