Fitch takes negative rating action on Dubai corporates

Transparency in both these areas, though improved, remains weak, and is detrimental to the ratings in the current environment.

The ratings continue to benefit from potential support from the government and Dubai's strong position and role within the UAE federation.

Dubai Holding Commercial Operations Group LLC's (DHCOG) ratings are largely explained by its ownership structure and strategic position in the development of Dubai.

Its strong sovereign linkage supports a Long-term Issuer Default rating (IDR) consistent with Fitch's assessment of Dubai's creditworthiness.

The DHCOG rating actions are summarised as follows:

DHCOG
Long-term IDR downgraded to 'A+' from 'AA-' (AA minus)

Senior unsecured rating downgraded to 'A+' from 'AA-' (AA minus).

Short-term IDR downgraded to 'F1' from 'F1+'
The Outlook for the Long-term IDR is Stable
Dubai Electricity and Water Authority's (DEWA) ratings continue to be supported by its position as the exclusive vertically integrated electricity and potable water utility in the Emirate of Dubai, consistently improving efficiency levels, and a modern asset base.

The DEWA rating actions are summarised as follows:

DEWA
Long-term IDR downgraded to 'A+' from 'AA-' (AA minus)
Senior unsecured rating downgraded to 'A+' from 'AA-' (AA minus).

Short-term IDR downgraded to 'F1' from 'F1+'
Dhs3.2bn 2013 Sukuk issued by DEWA Funding Limited downgraded to 'A+' from 'AA-' (AA minus)
The Outlook for the Long-term IDR is Stable
DHCOG is effectively 97.4%-owned by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai.

Also, DHCOG is highly strategic in the development of Dubai and continues to receive financial support from the Dubai government - mainly the provision of substantial amounts of free land.

For these reasons DHCOG is still regarded as strongly linked to the Dubai government.

On a standalone basis, DHCOG's business and financial profile would likely warrant ratings lower than the ones currently assigned.

The downgrades on DEWA also reflect the strong linkage of DEWA's ratings with the Dubai government.

The government's involvement in DEWA manifests itself in numerous ways, including its appointment of board members and the setting of electricity and water tariffs.

DEWA also closely coordinates its strategic plan, annual budget and funding plans with the government.

In addition, DEWA sources its gas, which is the primary fuel needed to fire its generation plants, from the Dubai Supply Authority, DUSUP.

On a standalone basis, and also because of the expected negative impact of investment requirements on its financial profile, DEWA's creditworthiness would warrant a Long-term IDR below 'A+'.

The recently revamped regulatory frameworks for electricity and water tariffs offer some mitigation to the forecast deterioration in financial profile, as evidenced by strong earnings performance in 2008.