Fitch Ratings has revised UAE-based port operator DP World’s (DP World’s) outlook to positive from stable and affirmed its long-term issuer default rating (IDR) at BBB-.
Fitch has also affirmed DP World’s senior unsecured rating at BBB- and its short-term IDR at F3. The ratings on DP World convertible notes due in 2024 and sukuk unsecured trust certificates issued by DP World Sukuk Limited have also been affirmed at BBB-.
“The positive outlook is supported by improving cash flow margins in the first half of 2015, strong liquidity, and expected deleveraging from 2016 onwards, assuming continued bolt-on acquisitions,” Fitch said. The acquisitions of EZ World (EZW) and Fairview Container will improve DP World’s business profile, it said.
EZW assets include Jebel Ali Free Zone. DP World is ultimately owned by the Dubai government-owned holding company, Dubai World. Fitch expects the acquisition of JAFZ to be positive for DP World’s operating efficiency at the Dubai’s Jebel Ali port.
“DP World’s ownership of JAFZ will enable it to improve the layout of the port access and enable it to expand its logistic capacity and access to support ongoing growth of the port of Jebel Ali and improve integration of the port area with the new Al Maktoum International Airport,” Fitch said. “Combining Jebel Ali port and EZW free zone allows DP World to integrate its logistics operations, underpinning port volumes.”
DP World has started building container terminal four which will increase capacity by 3.1m TEUs by 2018 from15.2m TEUs in 2014. DP World’s gross capacity utilisation improved to 79% at the end of 2014.
DP World is one of the world’s four largest container port operators. It has announced plans to invest $5.3bn in 2015-2018.
Fitch said its ratings reflect DP World’s standalone credit profile and do not include support or constraint from its ultimate parent, the Dubai government. DP World’s assets were ring-fenced during the debt restructuring process of its direct parent company, Dubai World. The company’s debt has no cross-acceleration provisions related to Dubai World or its subsidiaries above DP World in the capital structure, Fitch said.