DP World gets Fitch stable outlook
Dubai, July 6, 2013
DP World, the world's third-largest port operator, said Fitch Ratings has affirmed its long-term Issuer Default Rating (IDR) at 'BBB-' with a stable outlook.
Fitch has also affirmed the senior unsecured rating at 'BBB-' and the Short-term IDR at 'F3'. The Sukuk unsecured trust certificates issued by DP World Sukuk Limited have been affirmed at 'BBB-', said a statement from the Dubai-based company.
Fitch in its review said DP World's ratings reflect its strong position as one of the largest global container terminal port operators, with a geographically diversified portfolio of assets in key locations and high growth emerging markets.
Leverage is now considered strong in the context of the company's ratings and at levels more appropriate to allow cash flows to fund sizeable capex over the next two years, the ratings agency said.
Headroom should also enable DP World to weather challenging macro conditions, which have recently led to volume declines in DP World's key markets, it added.
DP World is one of the four largest global container port operators in terms of throughput. Its global market share remains at around 10 per cent (5.6 per cent on a consolidated basis) and the company has a dominant market share in the Middle East owing to its operation of Jebel Ali port in Dubai.
While throughput and EBITDA is concentrated in the UAE, DP World is considered geographically well-diversified relative to peers with a focus on high-growth emerging markets, important in an export-driven, albeit cyclical industry, said the ratings agency.
Most recently, exposure to DP World's Americas and Australia businesses have partially offset the volume declines witnessed in the UAE region.
DP World continues to plan capex of $3.7 billion in FY12- FY14 as part of its growth and expansion strategy of which $3 billion is planned in FY13 and FY14.
This investment will allow it to expand existing terminals including Jebel Ali ($850 million) and build new developments such as London Gateway ($1.6 billion).
However, while some concessions require certain levels of capex spending, DP World retains control over timing and consequently has some flexibility to defer investments, particularly where capex relates to a terminal's superstructure such as cranes, said the ratings agency.
According to Fitch, the strong liquidity, combined with good operating cashflows forecast in the near-term despite some forecasted declines in volumes, ensure there is adequate funding of capex over the next two years.
The ratings reflect the standalone credit profile of DP World and do not include support or constraint from its ultimate parent, the Dubai government, it added.-TradeArabia News Service