Blue City bonds junked - appears in The National, published Abu Dhabi
News has finally been published in Abu Dhabi's The National about Moody's downrating of Blue City bonds.
I first wrote about this after spotting a couple of sentences in Project Finance magazine three weeks ago. Also see Interesting Times for Blue City. There was a lot of discussion but few verifiable facts.
The National's article confirms that
Mr al-Lawati did say that the Omani government was committed to all outstanding real estate projects, perhaps opening the door for an injection of government cash at some stage. That would be complicated by outstanding legal issues.
He bewailed, "How can any Omani expect foreign investors to act if they themselves do not believe in the project?"
Food for thought. But more than that, how do nationals connect with the declared government objective of diversifying from oil? Al Madina al-Zarqa was intended to provide stimulus to this goal, creating a micro-economy in its own right, with jobs and services.
If Omanis can't identify with that goal, why not?
I first wrote about this after spotting a couple of sentences in Project Finance magazine three weeks ago. Also see Interesting Times for Blue City. There was a lot of discussion but few verifiable facts.
The National's article confirms that
"Moody’s Investor Services downgraded about US$399 million (Dh1.47 billion) of senior notes to “Ba1” from “Baa3”. The rating is now below investment grade. An official at Moody's said the project "had entered a challenging period."Wael al Lawati, the chief executive of Omran, the government's tourism and development company, was reported to have said that sales are slowing and credit harder to come by, particularly for projects in their earliest stages, such as Blue City.
As of August, the company in charge of the first phase of development, Blue City Investments 1, had booked only $30.6m in sales, compared with a target of $101m. In an interview in September, Mr Russell told The National that sales had risen closer to $50m, but that was well below the Nov 7 target of $186m."
Mr al-Lawati did say that the Omani government was committed to all outstanding real estate projects, perhaps opening the door for an injection of government cash at some stage. That would be complicated by outstanding legal issues.
"Blue City officials said they would not disclose the project’s sales for the current period or comment on the Moody’s report."The Times of Oman published an article about a visit to Al Madina al-Zarqa (the new name for the project) from International College of Engineering and Management and German University of Technology in Oman two days ago. Marketing staff explained the purpose of the city and showed a video presentation. It wasn't clear whether students actually went on site but I noted that:
"The visit also highlighted the importance of occupational safety on site, especially in large projects such as Al Madina A’Zarqa – which has until now recorded two million man hours without injuries and over 500 hours without a loss time injury (LTI)."I did have an email from someone employed on the project yesterday who assured me that both Turkish and Greek contractors were on site, working for AECO LLC.
He bewailed, "How can any Omani expect foreign investors to act if they themselves do not believe in the project?"
Food for thought. But more than that, how do nationals connect with the declared government objective of diversifying from oil? Al Madina al-Zarqa was intended to provide stimulus to this goal, creating a micro-economy in its own right, with jobs and services.
If Omanis can't identify with that goal, why not?
