S&P Final Rating on Emirates Bank International and National Bank of Dubai

Earlier this week, Emirates National Bank NBD announced that it was terminating S&P's rating services.  The market assumption is that this was in response to S&P's downgrade of DHCOG and the rather negative comments S&P made about DHCOG and transparency in the local market.

Whenever a rating agency stops rating an obligor or an issue, it updates its view on the ratings of that entity so that it leaves the market with an accurate read of its credit opinion.

Today S&P reaffirmed its ratings of BBB/A-2 (long term and short term respectively) for Emirates Bank International and National Bank of Dubai with negative outlooks on both  At this point both EBI (which was formed from the rescue of several failed or near failed banks in Dubai) and NBD (which was the previous Ruler of Dubai's personal bank and which was run very conservatively but a canny old Scot at one time) have merged to form a new bank, Emirates NBD.  

The ratings of the two banks benefit substantially (three notches to be precise) based on the assumption that as a systematically important bank, ENBD would receive extraordinary support from the UAE authorities (meaning the Federal Government and the Central Bank of the UAE). Other positive factors were the bank's leading commercial position and its adequate preprovision earnings capacity.  On the negative side were depressed financial conditions in Dubai and high exposure to weakened Dubai government related entities.

ENBD has some AED 7 billion (US$1.9 billion) of debt maturing in 2010. 

As of 30 September 2009, the bank had total assets of AED291 billion (US$79.3 billion), equity of AED 32.2 billion (US$8.8 billion) and medium term debt (bonds and syndicated loans) of AED25.7 billion (US$7 billion).  When adjusted for debt payments due in 4Q09, the adjusted medium term debt total is AED23.4 billion (US$6.4 billion). 78% of that amount matures in the period 2010-2012 as follows:  AED7 billion  (US$1.9 billion) in 2010, AED3.5 billion (US$1 billion) in 2012 and AED7.8 (US$ 2.1billion) in 2013.