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London: Bonds used to finance Al Sawadi Investment & Tourism Co.'s $20 billion Blue City resort development in Oman may have their ratings cut because of poor property sales, Fitch Ratings said.
Fitch placed $526 million of debt issued by Blue City Investments 1 on rating watch negative, the New York-based ratings company said in a statement on Saturday.
The ratings action covers bonds rated BBB-, the lowest investment grade level, and BB, two steps lower.
Warning
"If sales performance does not improve significantly over the coming months and quarters, the borrower may eventually struggle to continue funding the construction costs of the project," Fitch said in the report.
Bear Stearns arranged the bonds in November 2006 as part of a $925 million financing for the first construction phase of a residential, hotel and leisure resort.
Sales for the most recent reporting period were $25.6 million, 47 per cent below Blue City Company 1's business plan for the period, Fitch said.
The ratings agency also cited a dispute between Al Sawadi Investment & Tourism shareholders AAJ Holdings Co. and Cyclone over the company's stock as a reason for the rating action.
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