Dubai asks for delay over debt
DUBAI WORLD, the owner of P&O, triggered fury last night after it called for a moratorium on its debt repayments. The announcement sent the cost of insuring Dubai’s sovereign debt against default soaring above Icelandic levels. The emirate was last night judged the sixth riskiest country in the world by the credit markets.
The news from the firm, which has $59bn (£34bn) in liabilities, also prompted Moody’s and Standard & Poor’s to cut the ratings on several other Dubai state companies, saying they may judge the plan a default.
Dubai World – the Dubai government’s main investment company – and its Nakheel property unit called in Deloitte to advise it on restructuring and asked creditors for a six month moratorium on repayments. Debts maturing before the end of the year include $3.5bn of Islamic bonds due on 14 December.
Dubai’s ministry of finance yesterday also raised $5bn in bonds from Abu Dhabi. The tranche was fully subscribed equally by National Bank of Abu Dhabi and Al Hilal Bank. The Dubai government has $80bn in debt.
RBS?analyst Okan?Akin said: “The timing could not have been worse. If Dubai had come with a similar proposal six months ago it would not have been so bad but given it was making supportive comments all along, announcing a restructuring just three weeks before maturity will hurt a lot of investors.”