The long-term issuer rating of Global marine terminal operator DP World Limited has been upgraded to Baa2 from Baa3 and the long-term issuer rating of Jebel Ali Free Zone FZE (JAFZ) to Baa2 from Baa3, according to Moody’s rating agency.
“Our decision to upgrade DP World’s ratings is a result of the company’s credit metrics broadly meeting the criteria for an upgrade in conjunction with Moody’s recognizing that the company retains a degree of financial cushion in its credit metrics at the Baa2 level despite the current challenging global trade environment,” Rehan Akbar, a Moody’s Assistant Vice President – Analyst, said.
“JAFZ’s upgrade directly reflects the company’s close interlinkages with parent DP World as well as the robustness of its credit profile,” Akbar added.
The rating action on DP World is a result of Moody’s view that the company has broadly met the guidance for an upgrade, namely retained cash flow (RCF) to net debt being in the mid-teens and funds from operations (FFO) interest coverage being sustained above 3.5x.
Furthermore, Moody’s said that the outlook on all ratings is stable.
The outlook on DPW’s rating is based on Moody’s expectations that the company will be able to navigate through the currently challenging operating environment as a result of its global geographic footprint and from the financial flexibility it has in delaying capex spending. The stable outlook also assumes that DPW will not exceed or persistently maintain leverage at the upper end of its net debt to EBITDA guidance of 4.0x (on a reported basis).
The stable outlook on JAFZ’s rating incorporates Moody’s expectations that JAFZ’s competitive market position in Dubai will remain intact for the foreseeable future and that DPW will adhere to policies that will not adversely affect JAFZ’s credit profile.