Dubai-based port operator DP World Ltd. USD5 billion debt issuance program rated 'A+'

The company is expected to issue MTN notes under the program and, via DP World Sukuk Ltd. (a limited liability company benefiting from a purchase and sale undertaking and "mudaraba" agreement with DP World), issue U.S. dollar "sukuk" trust certificates. Combined MTN and trust certificate issuance will not exceed $5 billion in the near term, and will principally be used to partially refinance existing credit facilities.

We expect to rate notes issued under the program and any proposed sukuk trust certificates at the same level as the corporate credit rating on DP World.

About $4.5 billion of DP World's existing credit facilities benefits from a charge over its shareholding in Peninsula & Oriental Steam Navigation Co. (a wholly owned subsidiary of DP World) as well as a guarantee from the Ports, Customs & Free Zone Corp. The reduction of outstanding debt under these facilities, coupled with the likelihood of future debt issuance under the program, through sukuk trust certificates or by bilateral loan arrangements, means that the rating on the debt program can be equalized with the corporate credit rating on the company, notwithstanding the potential subordination of rights of debt program holders to those of the credit facility providers.

The ratings on DP World reflect the implicit sovereign support of the Emirate of Dubai as the company's 100% indirect owner; its strategic importance as a conduit for diversifying the external revenues of the emirate; and the previous tangible financial, operational, and extraordinary state support for the company's activities. There are, however, no formal guarantees.

DP World is a major international port operator and its activities in Dubai benefit from a strong hub position. The company also boasts geographic diversification after recent large international acquisitions. Like other port operators, DP World is exposed to the global economy and developing international trade streams, in particular to and from China and India. The company is also likely to face heightened port competition for transshipment, due to the rapid global development of ports, along with increasing consolidation in the shipping industry.