Dubai

[iam802]

Dubai World Seeks to Delay Debt Payments as Default Risk Soars

http://www.bloomberg.com/apps/news?pid= ... zZ2M&pos=1

Nov. 26 (Bloomberg) -- Dubai World, with $59 billion of liabilities, is seeking to delay debt payments, sending contracts to protect the emirate against default surging by the most since they began trading in January.

The state-controlled company will ask creditors for a “standstill” agreement as it negotiates to extend maturities, including $3.52 billion of Islamic bonds due Dec. 14 from its property unit Nakheel PJSC, Dubai’s Department of Finance said in an e-mailed statement. Moody’s Investors Service and Standard & Poor’s cut the ratings on several state companies, saying they may consider the plan a default.

...

[LenaHuat]

I think 7 emirates form UAE. Dubai has surrendered sovereignity to Abu Dhabi. Ah, see, imprudent leverage can wipe a state off.

[winston]

Time to start a thread on Dubai...

=================================

Dubai World crisis hits celebrity islands

Brad Pitt and Angelina Jolie, together with David Beckham and a host of other celebrities and sportsmen, could lose their shirts after buying villas in Palm Jumeirah in Dubai, a luxury development that juts out into the Gulf.

When the property bubble burst this year, residents saw the value of their investments collapse.

On Wednesday their situation worsened, according to The Times of London, as developer Nakheel and its state-owned parent made a request to suspend debt repayments.

The statement rocked credit markets around the world and prompted analysts to question whether Dubai, the most populous of the United Arab Emirates, will be able to meet its obligations. The concern is that Nakheel will be unable to continue developing the Palm and neighboring projects, The Times reported, leaving Dubai and its coastal waters an ugly, unfinished construction site.

When the 2,000 villas and townhouses on the Palm went on sale in 2002, they sold out in a month. Passing through en route to the World Cup in Japan and Korea were the England football team, and several players stopped off to sign up for 1 million (HK$12.8 million) properties on the artificial island, with Michael Owen, David James, Joe Cole, Andy Cole and Kieron Dyer, it was reported, joining Beckham on the beaches.

Nakheel is now in deep trouble and struggling to cover its debts, The Times reported. Dubai World, a government conglomerate that owns the developer, is US$60 billion (HK$468 billion) in the red. Wednesday's announcement by the Dubai government that it wishes to suspend repayment of Dubai World's debts for six months is the clearest indication that the emirate can no longer meet its obligations. Work has stopped on several major projects around the city.

http://www.thestandard.com.hk/news_deta ... 91127&fc=8

[LenaHuat]

White swan of cities, slumbering in thy nest
So wonderfully built among the reeds
Of the lagoon, that fences thee and feeds,
As sayeth thy old historian and thy guest!
White water-lily, cradled and caressed
By ocean streams, and from the silt and weeds
Lifting thy golden filaments and seeds,
Thy sun-illumined spires, thy crown and crest!
White phantom city, whose untrodden streets
Are rivers, and whose pavements are the shifting
Shadows of palaces and strips of sky;
I wait to see thee vanish like the fleets
Seen in mirage, or towers of cloud uplifting
In air their unsubstantial masonry.

From Longfellow's Birds of Passage. Be forewarned abt mirages in desert. They have only themselves to be blamed.

What will happen to the unsubstantial masonry?
The Towers of cloud were substantial, indeed

[winston]

TOL:-

I dont think this will be the cause for the crash. I think there would be a sharp rebound and that's the time to get out.

Dubai's friend would be able to help them out. But why did they have to default in the first place ?

[KimHuat]

Anyone know any Spore companies involves in Dubai nfrastructure play, Kepcorp, Hyflux,SMRT???

[Musicwhiz]

Anyone know any Spore companies involves in Dubai nfrastructure play, Kepcorp, Hyflux,SMRT???

Not that I know of.

My companies are involved with Algeria and Libya (Boustead) and Bahrain (MTQ). But so far not Dubai as I know of.

Regards.

[winston]

So did those guys in Dubai bought alot of Puts on the indices before they announce the default ?

[winston]

Abu Dhabi would not let Dubai go bankrupt: analysts

DUBAI - Dubai's request for a debt moratorium for its Dubai World conglomerate worried markets on Thursday, but the Gulf city state can count on Abu Dhabi, its deep-pocketed rich brother, to avoid default, analysts said.

'Dubai as a state... is not on the verge of bankruptcy, thanks to the support of Abu Dhabi,' said Pascal Devaux, Middle East risk assessment economist at BNP Paribas.

Dubai is one of seven city states that make up the United Arab Emirates, along with Abu Dhabi. On Wednesday, it announced that it intends to request a 'standstill' for at least six months on the maturing debt of Dubai World, its largest and most-indebted state-run holding.

That sent jitters through major world stock markets on fears of a potential default by Dubai, which has a total debt of around US$80 billion, mostly owed by state companies.

Standard and Poor's estimated last month that Dubai state-related companies are due to repay some US$50 billion in debt over the next three years, which represent 70 per cent of the emirate's gross domestic product.

The ratings agency said on Wednesday that Dubai World's action amounts to a default and it downgraded companies in the group by several notches.

On the immediate horizon, Dubai World construction unit Nakheel was due to repay US$3.5 billion on December 14 in the form of maturing Islamic bonds.

But although the picture appears bleak, Dubai's oil-rich leading partner in the UAE, Abu Dhabi, is seen as likely to shore up the emirate.

'Abu Dhabi would not allow the financial collapse of Dubai,' said Dubai-based analyst Ibrahim Khayat.

But he said the UAE heavyweight, which sits on more than 90 per cent of the federation's oil reserves and owns the world's largest sovereign wealth fund, might seek to bring Dubai under its control.

'Abu Dhabi could allow the weakening of Dubai within the framework of the competition between the two, but a collapse of Dubai would also affect Abu Dhabi,' Mr Ibrahim said.

Monica Malik, from EFG-Hermes investment bank, pointed out that it is not just Dubai that would be affected.

'This announcement highlights the substantial headwinds facing the UAE economy,' she said.

Abu Dhabi has already come to Dubai's help twice since the once-booming emirate was hit by the global crisis last autumn. The first time was in February, when the UAE central bank pumped US$10 billion into a support fund established by Dubai to deal with its mounting debt issue.

And on Wednesday, just a few hours before raising the spectre of default, Dubai announced that it had raised a further US$5 billion from two Abu Dhabi-controlled banks which subscribed fully to a new bond issue.

Dubai had said it aimed to raise US$20 billion through its support fund.

'The fact that Dubai World requested to reschedule its debt at the time when Dubai raised US$5 billion means that either Dubai is in a catastrophic state or that the loan was conditioned to restructuring the whole group,' said Mr Devaux.

'There is a competition between the two emirates. Maybe Abu Dhabi is taking the chance to put its hand on Dubai, taking advantage of the crisis,' he said.

Confusion surrounds Abu Dhabi's latest cash injection and its allocation, mainly because Dubai said the fresh capital will not be used in the restructuring of Dubai World.

Although Abu Dhabi's oil revenues dropped drastically last autumn due to a sharp drop in crude prices, the emirate should be in a better position now that oil prices have recovered 'Why did Dubai not get the full US$10 billion needed for the support fund from Abu Dhabi,' asked another economist, requesting not to be named and pointing out that Abu Dhabi could have supplied Dubai with the needed money.

'One would assume that Abu Dhabi knew of what was going to happen in Dubai World before it being announced,' he added, saying the extent of Abu Dhabi's willingness to help Dubai remains unknown.

'This is the million-dollar question,' he said.

Source: AFP

[winston]

Dubai gambles with its financial reputation By Jim Krane

[img]The emirate’s inability to repay also casts a shadow on the Maktoum family’s vital relations with its cousins who rule Abu Dhabi, the al-Nahyans, who seem to be letting their poorer kin sweat it out in public. One wondered what price Abu Dhabi might demand for a full bail-out.

One plausible option was a tighter union among the seven UAE states, with maverick Dubai forced to trim its embarrassing ties with Iran and Israel. Dubai might also have been asked to merge its independent customs service into the federal bureaucracy. Sheikh Mohammed may be calculating that Dubai’s foreign policy freedom is more valuable than its financial reputation.

There is logic in this. The bankers in London and New York have been important in nurturing Dubai’s growth. But the emirate’s ties with the region – Karachi, Mumbai, Riyadh and Tehran – are those that will make or break this city. [/img]

http://www.ft.com/cms/s/0/27eee244-dad0 ... ck_check=1