S&P downgrades Emaar credit rating to negative

Standard & Poor's has downgraded the corporate credit rating of Dubai-based Emaar Properties PJSC to two notches above the lowest investment grade level, which would have implications on the company's new debt programmes.

Emaar's corporate credit rating has been brought down to BBB+ from A-. The outlook is negative, S&P said.

"The rating action reflects the continued weak real estate markets in Dubai, and our increased uncertainties about the depth of the downturn and the pace of eventual recovery.

"The weak markets are negatively affecting our view of Emaar's business risk, and are likely to weaken Emaar's currently healthy financial position in the near to medium term," said S&P credit analyst Alf Stenqvist.

The ratings on Emaar continue to reflect the group's important role and strong position in the Dubai property development market and its close relationship with, and 32 per cent ownership by the Dubai government (not rated).

The rating includes a two-notch uplift from the standalone assessment to reflect implicit government support.

It also reflect the group's current healthy financial position, low debt leverage, and a strong asset base. The main constraining rating factors include the inherent risks in the cyclical property development industry and the group's large exposure to the weakening of the Dubai real estate market.