Moody's downgrades Tecom mother company

Moody's investor service has downgraded the rating of Dubai Holding Commercial Operations Group, citing real estate concerns.

The company owns TECOM Investments among other subsidiaries.

The ratings agency said in a statement that it had "downgraded to B2 from B1 the senior unsecured issuer and debt ratings of Dubai Holding Commercial Operations Group (DHCOG)" on continued concerns over real estate.

It said that the downgrade "is based on the continued negative impact that the challenging conditions in the Dubai real estate market are having on the group's financial profile."

Dubai was hard hit by the global economic downturn, which put brought its booming real estate developments to a virtual halt.

Although less affected by the economic downturn than its real estate subsidiaries, DHCOG's free zone and hospitality businesses did not escape the aftermath of the global recession.

Moody's said its ratings remained under review for further possible downgrade, adding that any future positive outlook on DHCOG are subject to "a recovery" in "Dubai's weak real estate market."

Early this month, DHCOG had said that it posted a loss of 6.4 billion dollars last year against a net profit of 4.74 billion dollars the year before, largely due to impairments.

The group had said that its total 2009 revenues slipped 28 percent to 2.6 billion dollars compared with 2008.

The company -- which owns Dubai Properties Group, TECOM Investments and Jumeirah Group -- said the global hospitality industry faced challenges in 2009 due to the worldwide recession.

In 2009, Dubai Holding divided its portfolio between DHCOG, which oversees the property, business parks and hospitality businesses, and the Dubai Holding Investment Group, which oversees investments.

In February, Fitch Ratings downgraded DHCOG ratings because of increasing doubts about the Dubai government's ability to back the group.

Dubai ruler Sheikh Mohammed bin Rashed al-Maktoum said in a CNN interview in June that the UAE economy was doing fine and that the worst for Dubai was over.

Tecom is the prime investor in SmartCity.

Tecom Investments in a statement a few weeks ago said it was committed to SmartCity Malta, which remains on track to be inaugurated on October 10 this year.

“Any news related to other Dubai Holding entities has no impact on SmartCity Malta or its operations,” it said.