Moody's Ratings has placed Dubai-based developer Binghatti Holding’s ratings on review for a potential downgrade on the company’s deteriorating liquidity profile and uncertainty about its ability to generate cash flows amid war-driven uncertainty.
The Ba3 corporate family rating and Ba3-PD probability of default rating of the luxury property developer, which previously had a stable outlook, are being reviewed, the ratings agency said.
The review for downgrade follows the company's release of its interim financial results for the first half of this year, underpinning liquidity and cash flow concerns over the next 12 months to 18 months, which could “further pressure the company's liquidity cushion”, Moody’s said.
Like some of its peers in the broader Gulf market, Binghatti has struggled to maintain sales and generate cash flows amid the war.
The conflict, which broke out at the end of February after US-Israeli strike on Iran, quickly engulfed the entire Middle East as Tehran launched waves of missile and drone strikes on its Arab neighbours, damaging civil and energy infrastructure.
Though Gulf economies have remained resilient, sectors including aviation, hospitality and property have taken a hit.
Liquidity profile
Binghatti in July said its unrestricted cash at the end of June fell to Dh393 million (Dh107.2 million), down from Dh597 million at the end of last year. Its free cash flow consumption hit Dh1.5 billion during the first six months of the year.
“We view the company's liquidity profile is weaker than we had anticipated amid continued uncertainty related to the unresolved regional conflict,” Moody’s said.
“As a result, Binghatti's liquidity profile is more sensitive to risks including slower property sales, project delivery delays, weaker customer collections and reduced capital market access ahead of its bond maturity in early 2027."
In December, Binghatti teamed up with luxury car brand Mercedes-Benz to launch a Dh30 billion project as demand for prime housing soared in the emirate.
The project in Meydan, called the Mercedes-Benz Places – Binghatti City, is spread across 929,000 square metres and features 13,000 units.
In January, Binghatti said, the starting price of a studio at the project was Dh1.6 million and Dh2.6 million for a one-bedroom unit. The price of two-bedroom and three-bedroom units started at Dh3 million and Dh5 million, respectively.
The project was Binghatti’s second collaboration with the German car manufacturer after the 65-storey residential tower unveiled in Downtown Dubai in 2024.
The new project is being funded through the company’s its own equity, it said at the time.
Moody’s said governance factors are a “key consideration” in its latest the rating action.
As part of the review, it will project delivery trajectory and its implications for the company's liquidity profile as well as the company's financial policy and liquidity management practices.
Moody’s will also monitor the company’s commitment to maintain a sufficient liquidity buffer ahead of the bond maturity, which “we view as governance considerations”.
“In case there is no strong evidence of an adequate liquidity buffer well in advance of the bond maturity, we would view the company's liquidity management as no longer commensurate with its current rating level,” Moody’s said.
