Standard & Poors said on Thursday it was considering downgrading the ratings of six Dubai companies, including Emaar Properties, because of doubts about whether the government would help state-linked firms pay back debts.
S&P said it could downgrade the ratings of companies by one or more notches depending on how the government decides to deal with the $3.5 billion Islamic bond of unrated palm island developer Nakheel, which matures in December.
The ratings agency said it had been told by Nakheel's parent company, Dubai World, that it was studying "all options" to deal with outstanding liabilities, including restructuring, raising doubts the government will step in to settle debts in full.
"The need for Dubai government support is potentially increasing in the face of deteriorating fundamentals for some of the rated government-related entities," S&P said in a statement.
Dubai's real estate sector is suffering from a sharp correction in prices and scores of expansion projects have been put on hold in recent months.
"The mere possibility of a debt restructuring ... stands at odds with our prior expectation that the government of Dubai is committed to providing extraordinary support" to service the debts of state-linked firms in full.
During a six-year building boom supported by high oil prices, Dubai and state-linked firms borrowed heavily to finance expansion projects. Some $10 billion of bonds and syndicated loans are due for refinancing this year, S&P said in March.
Dubai's government sold $10 billion in bonds to the UAE central bank earlier this year and said it would sell a second tranche of the same amount later this year to help state companies meet their debt and financial commitments.
S&P had downgraded the credit ratings of seven Dubai companies in March.
In addition to Emaar, the latest ratings review could also impact ratings of DIFC Investments, DP World, Jebel Ali Free Zone, the Dubai Multi Commodities Centre and Dubai Holding Commercial Operations Group, S&P said.