Dubai: Proving the sceptics wrong, once again Dubai Holding Commercial Operations Group (DHCOG), a Dubai government-owned entities (GRE) yesterday confirmed the repayment of a $500 million (Dh1.83 billion) bond and three scheduled interest payments on its Medium-Term Notes (MTN).
Late last year, rating agency Moody's had warned that some Dubai GREs including DHCOG that have debt maturities this year are likely to face refinancing risks. DHCOG responded by saying that it would meet its debt obligations.
"DHCOG will repay the dollar bond, and make the coupon payments, from its internal cash flow. Today's announcements reaffirm DHCOG's proven track record of meeting its financial obligations in full when they are due," said Ahmad Bin Byat, Chief Executive Officer of Dubai Holding.
The company will be repaying the $500 million floating rate MTN that matures on February 1. In addition it will also meet the coupon obligations of €35.62 million (Dh131 million) on the €750 million fixed-rate MTN and £30 million (Dh173.1 million) on the £500 million fixed-rate MTN. Both are due on February 1.
"DHCOG's operating liquidity remains good. It has robust hotel management, telecom, free zone and property businesses that contribute a healthy cash flow," said Bin Byat. Fitch yesterday revised the outlook on DHCOG to stable from negative and affirmed its Long-term Issuer Default Rating (IDR) and senior unsecured rating at ‘B'. "The outlook revision reflects the company's good progress with its non-core asset disposal programme and better-than-expected operating performance in the hospitality and rentals divisions and reduced leverage," said says Bashar Al Natoor, Director in Fitch's Emea Corporates team in Dubai.
With the repayment of a 250 million Swiss franc (Dh985 million) MTN in July 2011 and commitment to repay $500 million as announced yesterday, the company has no significant maturities before 2014.