Moody's says UAE banks exposed to Dubai World already on review, no ratings changes yet
Associated Press
11/27/09 5:50 PM EST
NEW YORK — Moody's Investor Service said Friday that ratings on banks in the United Arab Emirates were already on review, and that no immediate downgrades are expected in light of Dubai's debt crisis.
The banks with significant exposure to the city-state's crisis were already on review or carried a negative outlook on their deposit ratings, Moody's said in a release.
Dubai World, a government investment company with around $60 billion worth of debt, has asked creditors if it can postpone forthcoming payments until May. The news has rattled confidence about the global economy, with stock and commodity markets tumbling in New York, London and Asia.
The worries are centered on fears that some banks could further tighten lending, which could in turn stall the global economic recovery. Also of concern is that international banks could suffer big losses if Dubai's investment arm defaulted on its $60 billion debt.
But Moody's said that if the repercussions remain confined to exposures to Dubai World and its subsidiary, Nakheel, banks in the United Arab Emirates will likely be able to absorb any fallout.
The UAE banks that are already on review for downgrade are Emirates NBD, Mashreqbank and Dubai Islamic Bank. All are based in Dubai.
Moody's said it will monitor developments and review ratings as the situation develops. Ratings reviews are expected to be completed over the next few weeks.
In recent years, Dubai has expanded with ambitious projects like the Gulf's palm-shaped islands and the world's tallest skyscraper. In the process, the state-backed networks nicknamed Dubai Inc. have racked up $80 billion in red ink.
