Emaar downgraded as profits fall

Emaar Properties has seen its credit rating downgraded by Standard and Poor's (S&P) as its profits for the first quarter of the year fell -75% to AED 237 million (US$ 65 million) compared to the first three months of 2008. Revenues for the quarter were down -39% to AED 1.55 billion (US$ 420 million) from compared to Q1 2009.

S&P has given Emaar and six other Dubai government-controlled companies a ‘Credit Watch Negative' rating. This can be the precursor to downgrading companies' debt to ‘junk' (below investment grade) status.

In March S&P downgraded Emaar to the medium BBB rating. The agency said at the time that if Emaar was a stand-alone company its rating would be lower, but the fact that it is 32% owned by Dubai's government implied it would be supported.

However, S&P says it is now uncertain as to the extent of that implicit support in the face of "deteriorating fundamentals."