The shares fell nearly 9 per cent to Dh1.29 at 11:50 am in Dubai, the lowest price since May 26.
Shuaa shares slide on credit downgrade
Shuaa Capital shares fell to their lowest price in a month after the country's largest investment bank had its credit rating cut three levels by Moody's Investors Services. The shares fell nearly 9 per cent to Dh1.29 at 11:50 am in Dubai, the lowest price since May 26, after Moody's put the bank on review for further downgrade because of its dispute with Dubai Banking Group (DBG) over a convertible bond.
"Moody's comments only highlight the uncertainty surrounding Shuaa," said Ali Khan, managing director of Arqaam Capital. "What's clear is that any time there's uncertainty surrounding a firm and it involves a major payout, that it will have an adverse impact on the firm's share price." The Dubai based company had its rating lowered to B1, four levels below investment grade, because of "growing uncertainties" about a Dh1.5 billion convertible bond issued to DBG, a unit of Dubai Holding.
DBG earlier rejected Shuaa's attempt to offer the company shares in a bond-to-equity conversion worth about $408 million. Instead, DBG demanded the redemption of the note with accrued interest. The UAE's securities regulator last week said it won't allow the conversion until an agreement is reached between the companies. firstname.lastname@example.org