Fitch upgrades DP World’s rating; outlook stable

Fitch Ratings upgraded UAE-based port operator DP World Limited's long-term issuer default rating (IDR) to BBB from BBB- and its short-term IDR to F2 from F3, while maintaining a stable outlook.

The decision was attributed to the group’s stable cash flow and expansion plans, the ratings agency said in a note.

“DP World's credit profile is supported by the geographical diversification of its business, the high utilization rate of its terminals, which supports the group's pricing power as well as the long-term maturity of its main concession,” Fitch explained.

While the lack of creditor-protective features in DP World's debt structure was described as a weakness, Fitch said such risks are largely offset by the company’s well-established access to the capital markets, as well as its solid liquidity position.

“DP World is acquisitive and this reduces the long-term visibility of its capital structure,” the note said adding that the ratings did not include support or constraint from the Dubai government.

A negative rating action in the future could apply if firm’s expenditures affect its leverage profile. Expansion into higher-risk business areas and higher-than-expected debt-funded acquisitions are also seen as factors that could potentially affect DP World’s rating.

Developments that could lead to positive rating action include: Fitch-adjusted net debt on EBITDAR sustainably below 4x under Fitch's rating case, and inclusion of creditor-protective features in DP World's debt structure.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com