Saud Masud, head of Middle Eastern research at UBS AG, talks about Dubai World’s plan to renegotiate about $26 billion of debt. Masud also discusses the future of Dubai’s economic model and the risk associated with its dependence on foreign workers and the real estate market. He speaks with Bloomberg’s Linzie Janis from Dubai.
Dubai : The impact with the $23.5-billion (Dh86.24 billion) Dubai World and Nakheel debt restructuring plan will be manageable for UAE banking institutions, analysts say.
The Dubai Federal government on Thursday announced a comprehensive set of proposals for Dubai Globe creditors represented by 97 banking institutions and financial institutions for the repayment with the debts, including a 100 per cent payment in 5 to eight many years. The federal government has also agreed to inject $9.five billion into both entities in exchange for equities that will help them recover in the present financial tension.
“The likely damaging impact on the UAE banking program should be manageable without extra assistance. While all with the particulars with the restructuring have yet to be clarified, the proposed 100 per cent principal repayment, albeit with extended maturities, and continuing commercial rates of curiosity, appear to be a much more favourable solution than the banks might have feared in the last couple of months,” credit rating agency Fitch said in an email declaration.
Difficult time
Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee, said, “Our monetary support demonstrates our dedication to finding a fair and equitable solution for those stakeholders in the wider curiosity with the economy. The Federal government understands that this restructuring procedure has been a hard time for all events.”
The International Monetary Fund (IMF) has praised the Dubai Federal government for providing “a fair and equitable solution for all stakeholders” in its debt restructuring plan.
“Today’s announcement through the Chairman of the Dubai Supreme Fiscal Committee for the restructuring of liabilities of Dubai World and Nakheel is really a welcome step further within the debt restructuring process. We assistance the authorities intention to find a fair and equitable solution for all stakeholders,” the IMF said in a declaration issued on Thursday evening, a copy of which was obtained by Gulf News.
“A satisfactory conclusion of this procedure will pave the way for enhancing overall credit problems, the expense climate, and economic activity in Dubai and the UAE in common.
“We encourage all events to construct on the momentum and work together in satisfactorily concluding Dubai World’s credit card debt restructuring.”
The Dubai Federal government mentioned it will support these proposals with substantial financial resources, such as a dedication to fund up to $9.5 billion in new funding more than the company strategy period. This is going to be funded by $5.7 billion remaining from the loan previously made accessible by Abu Dhabi and from internal Dubai Government resources.
Clarity
The announcement was immediately greeted by investors as the Dubai benchmark index jumped 4.three per cent — the greatest in latest weeks. Analysts expressed their optimism too. “The government’s press release has clearly enhanced market sentiment by providing more clarity and has put some correct meat about the bones with the restructuring strategy,” said Baldwin Berges, Managing Director of UK-based Silk Invest Limited.
Al Saleh reads acceptance signals
Dubai’s finance chief Abdul Rahman Al Saleh said he saw initial indications that creditors had been accepting Dubai World restructuring proposals, the official WAM news agency reported yesterday, citing an interview on Dubai state television.
Al Saleh said that the term he heard the most about the proposal is “positive,” adding that this represents “a preliminary indication that the strategy is being deemed acceptable.”
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