Fitch cuts two Dubai utilities

Fitch Ratings said it has taken actions on two Dubai companies - Dubai Holding Commercial Operations Group LLC and Dubai Electricity and Water Authority - and one United Arab Emirates corporate - Emirates Telecom Corp.

Dubai Holding Commercial's long-term issuer default rating was downgraded to A- from A+, senior unsecured rating to A- from A+ and short-term issuer default rating to F2 from F1. The outlook is negative.

Dubai Electricity and Water's long-term issuer default rating was lowered to A- from A+, senior unsecured rating to A-from A+, short-term issuer default rating to F2 from F1 and AED 3.2 billion 2013 sukuk issued by DEWA Funding Ltd. to A- from A+.

Emirates Telecom's long-term issuer default rating of AA- was placed on Rating Watch negative.

The corporate entities have strong operational and strategic ties with the Dubai and United Arab Emirates governments and the downgrades reflect a view that the credit profiles of the sovereign entities have weakened, Fitch said.

Although the sovereign credit remains strong, the agency said the lack of clarity on the process for non-budgetary financial transfers between the UAE federal government, central bank and individual emirates, is a source of weakness.

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