Fitch sees ongoing strong sovereign support for Dubai Holding Commercial Operations Group

This follows Fitch's discussions with DHCOG's management regarding government support, in light of recent Dubai government statements confirming that the government will support key corporations in Dubai.

DHCOG ratings continue to largely reflect its ownership structure and strategic position in the development of Dubai. DHCOG's ratings are as follows:

Long-term Issuer Default Rating (IDR) 'A+'; Outlook Stable

Senior unsecured rating 'A+'

Short-term IDR 'F1'

DHCOG is 100%-owned by Dubai Holding LLC, which in turn is 97.4%-owned by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and ruler of Dubai; 2.5 % by MRSA Investment LLC which is owned by the group's Executive Chairman who is also a UAE cabinet minister; and 0.1% by His Highness Sheikh Rashid Bin Mohammed Al Maktoum.

Fitch's analysis of DHCOG is based on its criteria report, entitled "Parent and Subsidiary Rating Linkage", which is available on the agency's public website. The agency uses this framework to determine whether or not to link the IDRs of a parent (in this case, effectively His Highness) and its subsidiary. Fitch's view is that the ruler of Dubai has full ownership and influential control over DHCOG.

The Executive Chairman of the group's parent Dubai Holding LLC is H.E Mohammad Al Gergawi, who is also the UAE Minister of State for Cabinet Affairs. There are no plans to change this structure, and there are no regulatory restrictions which affect the ownership and control of DHCOG.

In February 2009, the Central Bank of the United Arab Emirates (CBUAE) subscribed to a $10bn first tranche of a $20bn Dubai bond, which confirmed Fitch's view that the UAE federal government is willing and has strong incentives to support Dubai in meeting its financial obligations and continuing its development programme.

Fitch also views the liquidity improvement from Dubai's bond programme and its subsequent disbursement to selected Dubai government related entities as affirmative for the expected support to DHCOG and other government-linked corporates rated by Fitch.

DHCOG's main activities are exposed to Dubai's weakening real estate market and this will likely lead to reduced profitability, asset values and cash flows during 2009 and 2010. Dubai is experiencing a severe property market adjustment with property demand and prices declining, increasing customer delinquencies and slowing population growth. On a standalone basis, DHCOG's business and financial profile would likely warrant ratings lower than the current ratings.

Given the nature of support for government related entities rated by Fitch in Dubai, and incorporated into Fitch's analysis via its Parent and Subsidiary Rating Linkage Methodology, Fitch believes that there is no current reason to alter its assumptions regarding levels of support likely to be forthcoming for these entities.