JUNK status companies include ports operator DP World as residents of Peterborough UK unexpectedly rejoice....
INTERNATIONAL investors are still assessing potential HUGE losses after Dubai World, a state-controlled investment company, announced two weeks ago that one of its units wanted a halt in debt repayments.
Now credit rating agency Moody's has seen enough and immediately declared JUNK status for all the six major Dubai Government related firms after Government sources declined to issue any assurances to international investors in case of default.
But in a corner of Cambridgeshire England, the flags are out as the Dubai World wholly owned subsidiary 'retail shed' developer Gazeley Limited (recent acquired from Asda/Walmart) now immediately saddled with a JUNK status credit rating, will not be able to raise all the international long-term finance to build a massive downtown warehouse/rail terminal, over an important flood plain "Drysides" at Stanground,Cambridgeshire a high population residential district of the City of Peterborough.
The site is already being actively marketed by Gazeley, with an intensive 'softening up PR & media campaign, despite not yet having submitted a formal planning application. Stanground resident Julian Bray said: " This massive proposed warehouse rail terminal proposal conceived by Banksters in more profitable money-grabbing times was seen by some City Councillors as a way of reserving a place for themselves in the history books. With this massive collapse they will simply be history at the next election!".
"It is highly unlikely RBS already owned by the British taxpayer and holding most of the DP World debt, can justify further finance to the junk status Gazeley parent.
"The development has already blighted property in the area and would have introduced 24 hour noise and light pollution, 365 days of the year and substantially raised the water table in these flood prone times, as it is the Envionment Agency already has us marked down as a flood risk area. Its time we also junked Dubai owned Gazeley and its ill thought out massive shed development".
Creditors were shocked when the Dubai government refused to stand behind Dubai World or any of its subsidiaries and honour its debts in times of trouble.
Bonds issued by Nakheel, the beleaguered real estate unit, had been trading at more than their face value as investors were willing to pay a premium for what they perceived to be a de facto state guarantee.
But withdrawal of public support has put a question mark over the creditworthiness of several other government-related businesses. "This rating action follows recent comments and statements from government officials, which cause us to believe that no meaningful government support should be assumed for any entity that is not directly part of or formally guaranteed by the government," said Philipp Lotter, at Moody's in Dubai.
The six downgraded firms are ports operator DP World, Dubai Electricity and Water Authority, the business developer centre Jebel Ali Free Zone, Dubai Holding Commercial Operations Group, Emaar Properties and DIFC Investments.
The Dubai World woes have now spread to other state-run companies. The $26bn debt restructuring of Dubai World could almost double to $46.7bn as more of the emirate's businesses might struggle to meet debt payments, Morgan Stanley said in a research report. According to the investment bank, other companies that are vulnerable include Dubai Holding, Dubai Holding Commercial Operations Group, Borse Dubai and Dubai Sukuk Center.
Bloomberg News also reported that Nakheel, the real estate firm that has asked for a halt in its $3.5bn bond due on 14 December, made a loss of 13.4bn dirham ($3.65bn) in the first half of the year. The loss, which compares to a profit of 2.65bn dirham ($722m) in the same period last year, was attributed to write-downs of real estate values and lower sales,
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