Fitch Places Jebel Ali Free Zone on Watch Positive on EZ World Buy
Fitch Ratings has placed UAE based property group Jebel Ali Free Zone FZE 's ( JAFZ ) Long-term Issuer Default Rating (IDR) 'BB-' on Rating Watch Positive (RWP). Fitch has also placed JAFZ Sukuk (2019) Limited's senior secured rating 'BB-' on RWP. The rating action follows the acquisition announcement of EZ World, the parent of Jebel Ali FZ, by DP World Ltd .
KEY RATING DRIVERS
The RWP reflects Fitch's expectation that the acquisition will address the limited transparency at EZ World, given greater transparency at DP World (BBB-/Stable). However, we do not rule out the possibility of DP World extracting cash from JAFZ , if such a need arises. Fitch believes that JAFZ would benefit from operational and financial integration, as well as strategic partnership, with DP World over the medium term.
Fitch also understands from JAFZ management that there will be no changes to the business operations, capex needs and dividend policy of JAFZ in the medium term. The acquisition is also not expected to trigger a change of control clause within the Sukuk documentation. There will be no change in Jebel Ali FZ's funding structure in general.
RATING SENSITIVITIES
Fitch expects to resolve the RWP within the next six to nine months, following the completion of the acquisition. Fitch's review will focus primarily on the operational and financial integration aspects and strategic partnership between JAFZ and DP World . The ratings may be upgraded or affirmed, depending on the strategic, operational and financial ties with its new parent company.
For further information on key rating drivers and sensitivities, see "Fitch Upgrades Jebel Ali Free Zone FZE to 'BB-'; Outlook Stable' dated 8 July 2014 on www.fitchratings.com.
