Moody's upgrades DHCOG's ratings to B1; positive outlook

London, November 6, 2013: Moody's Investors Service has today upgraded the corporate family rating (CFR) of Dubai Holding Commercial Operations Group LLC (DHCOG) to B1 from B2 and the company's probability of default rating (PDR) to B1-PD from B2-PD. Concurrently, Moody's has upgraded the provisional rating of Dubai Holding Commercial Operations MTN Limited to (P)B1 from (P)B2 and the multi-currency debt instruments issued under this medium-term note (MTN) programme to B1 from B2. In addition, Moody's has assigned a positive outlook to all ratings.

"We have upgraded DHCOG's ratings because we believe that the company will be able to fully address its upcoming debt maturities, including its EUR750 million bond due in January 2014, as a result of its subsidiary Jumeirah Group raising an unsecured $1.4 billion syndicated loan," says Rehan Akbar, an Analyst in Moody's Corporate Finance Group and local market analyst for DHCOG.

RATINGS RATIONALE

Today's rating action follows the announcement made on 30 October 2013 by Jumeirah Group, one of DHCOG's four subsidiaries, that it has raised an unsecured $1.4 billion syndicated loan to be used to fund growth as well as for general corporate purposes at the DHCOG level. The loan facility will improve DHCOG's debt maturity profile and liquidity materially. The company will be able to use its internal available funds as well as the new loan to fully address its upcoming debt maturities, with the next significant debt repayment now being the GBP500 million bond due in February 2017. In particular, the loan has removed the refinancing risk associated with DHCOG's upcoming EUR750 million bond due on 30 January 2014, in Moody's view.

Moreover, both Jumeirah and TECOM Investments have demonstrated resilience throughout the economic downturn and the overall risk profile of the consolidated group is being reduced by the strengthening profile of a third subsidiary, Dubai Properties Group (DPG), which is a result of the strong upturn in Dubai's real estate market.

Moody's continues to view DHCOG as a government-related issuer (GRI). However, the company's baseline credit assessment (BCA), a measure of standalone financial strength, is aligned with the final B1 rating to reflect the rating agency's low expectation of exceptional government support for non-financial corporate GRIs in the Emirate of Dubai.

Moody's notes that bond holders are contractually subordinated to bank lenders in DHCOG's capital structure, but the company's asset base includes large unencumbered assets that provide significant asset coverage to unsecured financial creditors. Moody's could notch down the rating on the notes in the future if the proportion of secured debt in DHCOG's capital structure increases.

RATIONALE FOR POSITIVE OUTLOOK

The positive rating outlook assumes that DHCOG will continue its deleveraging efforts through selective non-core asset sales and that recurring revenues from TECOM, Jumeirah and DPG subsidiaries will continue to provide significant debt coverage.

WHAT WOULD CHANGE THE RATING UP/DOWN

Moody's could upgrade the ratings if DHCOG's financial profile were to translate into debt/capitalisation leverage trending below 40% and the company were to maintain interest coverage as defined by (FFO + Interest Expense)/Interest Expense of above 4.0x.

Conversely, DHCOG's ratings could come under negative pressure if the company's credit strength were to deteriorate substantially, resulting in debt/capitalisation above 50% and interest coverage falling below 3.0x. Signs of constrained liquidity or a deteriorating trend in recurring cash flow generation would also exert negative pressure on the ratings.

PRINCIPAL METHODOLOGY

Dubai Holding Commercial Operations Group LLC's and Dubai Holding Commercial Operations MTN Limited's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (1) business risk and competitive position compared with others within the industry; (2) capital structure and financial risk; (3) projected performance over the near to intermediate term; and (4) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Dubai Holding Commercial Operations Group LLC's and Dubai Holding Commercial Operations MTN Limited's core industry and believes Dubai Holding Commercial Operations Group LLC's and Dubai Holding Commercial Operations MTN Limited's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009 and the Government-Related Issuers: Methodology Update published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Dubai Holding Commercial Operations Group LLC (DHCOG) is a wholly owned subsidiary of Dubai Holding LLC and manages the non-financial investment businesses of the parent company. DHCOG operates four core units, namely Jumeirah Group, TECOM Investments, DPG and Emirates International Telecommunications. These businesses are active in hospitality, business parks, real estate and telecommunication investments, respectively.

In 2012, DHCOG reported revenues of AED9.2 billion ($2.5 billion) and a net profit of AED1.2 billion ($327 million).

The Local Market analyst for this rating is Rehan Akbar, +971.4.237.9565.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Lynn R Valkenaar

Vice President - Senior Analyst

Corporate Finance Group
Moody's Investors Service Ltd.
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David Staples

MD - Corporate Finance

Corporate Finance Group
Telephone: 00971 4237 9536

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