Credit rating agency Standard and Poor’s (S&P) has assigned state-owned Dubai Holding a negative outlook and withdrawn its rating for the group because of a lack of information, it said on Monday.
S&P said in a statement that it had assigned Dubai Holding “a negative outlook, and removed it from CreditWatch with negative implications, where it had been placed on April 30, 2009.”
The agency said it initially lowered the long-term corporate credit rating of the group to “B” from “BB+”.
“We subsequently withdrew the rating due to what we consider to be inadequate timeliness of information and insufficient documentation provided by DHCOG [Dubai Holding Commercial Operations Group] to maintain our surveillance,” it said.
Dubai Holding responded to S&P’s announcement by declaring that it has itself dropped S&P as a rating agency “due to its lack of understanding of DHCOG’s business, its operations and relationship with the government of Dubai.”
“Although DHCOG has been engaging with S&P and sharing adequate information frequently and in a transparent manner, S&P has, nevertheless, issued inaccurate statements coupled with factual errors that are misleading,” it said.
“Therefore, DHCOG discredits and disagrees with the content of the latest S&P report dated January 25, 2010,” it added.
The Dubai group said it would continue to work with other rating agencies and directly with investors with “full transparency.”
S&P credit analyst Pierre George said “the rating actions reflect our base-case scenario, based on the information we currently have, which notably incorporates materially-weaker-than-anticipated cash flow generation by DHCOG.”
The agency said it expected lower sales and lower selling prices of real estate units, and still-high cash outflows related to new investments.
S&P’s announcement is the latest blow to the debt-ridden emirate, which rocked global markets in November after requesting a six-month freeze on debt payments by Dubai World, Dubai’s largest conglomerate, in order to restructure it.
State firms in Dubai have since fallen from grace, with the government also saying it would not guarantee its corporates’ debts.
S&P said the lack of information from DHCOG has reduced certainty about ongoing support from the Dubai government, which it previously factored into the rating “as a key credit strength.”
“We now do not factor any ongoing government support into our rating because of this lack of information,” it said. “We also see the lack of market transparency [and] reliable market data, and the level of available financial information, which we consider low, as other negative factors.”
S&P said the group’s ability to meet its 2010 debt maturities could ultimately be weakened: “We believe that DHCOG’s exposure to the severe downturn in the Dubai real estate market also constrains its credit quality. We understand that free cash flows are likely to be negative for 2009 and 2010.”
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
RSS