Abu Dhabi likely to suffer contagion from Dubai: Moody's

Contagion effects for Abu Dhabi from the restructuring of Dubai World debt will be "unavoidable", ratings agency Moody's said on Monday, and the restructuring could lead to downgrades for United Arab Emirates bank ratings. "The contagion effect for Abu Dhabi will be unavoidable, as doubts will be raised as to how Dubai is going to finance its growth," Moody's analysts said in a weekly note. "The form of the proposed debt restructuring could increase the likelihood of downgrades of bank financial strength ratings (BFSRs) for the (UAE) banks that are already on review." Moody's said the potential default of quasi-sovereign Dubai World "changes long-held market assumptions regarding implicit government support of local credits". Moody's rates the UAE and Abu Dhabi at Aa2. It does not rate Dubai.