Moody’s upgraded its credit rating on DP World to Baa2 from Baa3 after the company’s net debt to EBITDA ratio fell below 4.0x, in line with a target set at the time of its 2020 recapitalization, Alphaliner reports.
The upgrade follows two major investments during 2022: DP World raised a total of $7.4bn with the sale of a 32.2% stake in Jebel Ali Port, Jebel Ali Free Zone and National Industries Park to Canadian investment fund CDPQ in May and Saudi Arabia. Hassana pension fund in December.
The proceeds were used to pay down the debt from the previous recapitalization. In 2020, DP World’s immediate parent company, Port and Free Zone World FZE (PFZW), issued $9 billion of debt to fund a $5.15 billion dividend to its ultimate parent Dubai World to redeem legacy debt and finance the repurchase of 19.55% of DP World. listed shares. This has already been fully refunded.
Moody’s said it believed DP World would keep leverage comfortably within the 4.0x cap going forward, while the debt repayment also reduced the possibility of negative interference from the Dubai government. DP World has so far reported strong operating results for 2021 and 2022 and adjusted gross debt to EBITDA is expected to reach 4.3x for the full year 2022, down from 6.9x a year earlier.