DEWA, the sole provider of electricity and water services, listed on the Dubai Financial Market (DFM), has been upgraded by Moody’s from Baa2 to A3 with a stable outlook. DEWA’s Baseline Credit Assessment (BCA) has also improved from baa2 to baa1.
Moody’s, a leading global agency providing data, intelligence, and analytical tools for business and financial decision-making, issued the upgrade.
In its assessment, Moody’s highlighted the “extraordinary support from the Government of Dubai” for DEWA.
Moody’s stated: “DEWA’s baa1 BCA is supported by the company’s (1) dominant market position in Dubai’s power and water sectors and a strong asset base with a 56% reserve margin in 2023; (2) generally strong credit metrics for the current rating level; (3) a tariff structure that supports healthy cash flow generation; and (4) a strong liquidity profile.”
The report further noted: “DEWA has excellent liquidity. As of 31 March 2024, the company held around AED 10B in cash and cash equivalents and AED 8.3B in committed facilities. Over the next 12 months, Moody’s expects DEWA to generate approximately AED 15B in operational cash flow, which, together with existing cash reserves, will cover the expected cash outflows of around AED 24B. These outflows represent Moody’s projections for DEWA’s committed capital expenditures, upcoming debt repayments, and dividends.”
The stable outlook reflects DEWA’s low business risk profile and considers the significant credit connections between DEWA and the Government of Dubai.
Saeed Mohammed Al Tayer, MD & CEO of DEWA, remarked: “The upgrade is a testament to the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and the directives of His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai, and His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance of the UAE.”
“The rating upgrade reflects favourable economic and fiscal developments in Dubai, which will result in improved financial and operational performance for the company. DEWA’s robust asset base, low overall leverage, and strong operating cash flow provide greater certainty of consistent dividends for our valued shareholders.”