Dubai: Port operator DP World's debt maturities are well-managed and the company does not face any refinancing difficulties, Yuvraj Narayan, the company's chief financial officer said at a conference in Dubai Wednesday.
DP World will seek dual listing in the London stock exchange next year after it publishes its financial results in March, he said yesterday. In June this year, the company had postponed its plans for dual listing.
Speaking at a conference on ‘Treasury, Risk and Finance Professionals' Narayan said, DP World has a debt outstanding of $8 billion (Dh29.3 billion) with most of it having long term maturity. "We target to have more than 85 per cent of our obligations with long term maturity" he said."During the last few years DP World expanded its operations acquisitions and most of the debts on our books came from acquisition financing.
Long term bonds
"In 2007 we converted these debts into long term bonds. If not for this action we would have been bankrupt," he said.Narayan said if Dubai based companies had opted for longer term financing in the place of bank financing many of them could have averted the kind of liquidity crisis they faced last year. Going forward, he said the focus of corporate treasuries should be to protect companies from potential risks arising from liquidity, currency risks and interest rate risks.
"Corporate treasury is a risk management centre and it should not be viewed as a profit centre. At DP World the treasury's function is to support our business through appropriate risk management functions. We do not buy an interest rate hedge in the market because there is a view that interest rates are going up, unless we have an underlying interest rate exposure to cover," he said. Irrespective of the current interest rates, Narayan said local and regional corporate entities should focus more on covering their immediate liquidity risks. "Banks have virtually stopped term lending. Thus cost of funding should not be a big concern in seeking long term funding sources," he said.
Narayan said credit rating has lost its credibility and something needs to change to make it relevant to ...investors and companies seeking funding. "Today many Dubai firms are rated sub investment grade because they are linked to Dubai but fortunately some investment managers who have flexibility still continue to do business with us," he said.
