Dubai World to meet creditor panel

Dubai World to meet creditor panel
The Economic Times, December 03, 2009, Page 17

StanChart, HSBC, Lloyds, RBS, Emirates NBD And Abu Dhabi Commercial Bank On Panel

Inal Ersan & Raissa Kasolowsky DUBAI

GOVERNMENT-OWNED Dubai World will meet its main creditors next week to discuss a request to delay payment on $26 billion in debt that has shaken global markets and confidence in the Gulf Arab business hub.

The meeting would be the first formal encounter between Dubai and key lenders since the conglomerate that spearheaded Dubai’s rapid growth disclosed its debt woes on Nov 25.

An Abu Dhabi bank executive, who asked not to be named, said London-listed Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland, along with local lenders Emirates NBD and Abu Dhabi Commercial Bank were on the creditors panel.

The banks did not immediately confirm their participation on the committee that an Asianbased banking analyst said was likely to reflect those with greatest exposure to Dubai World, whose debts were run up during a property boom that turned to bust with the global financial crisis last year.

But a source at a Dubai-based bank confirmed the makeup of the panel.

Dubai World has asked creditors of its flagship property firms Nakheel, developer of three palm-shaped islands in the Gulf, and Limitless for a six-month debt repayment standstill as part of a restructuring plan. The most urgent question is the fate of Nakheel’s $3.52 billion Islamic bond, which matures on Dec. 14.

Dubai, part of the seven-member United Arab Emirates federation, said the government would not guarantee the debts of Dubai World, whose overall liabilities total almost $60 billion, including those of units not part of the restructuring.

The International Monetary Fund said on Tuesday that banks from Britain are the most exposed to the conglomerate which boasts the motto “The Sun Never Sets on Dubai World”.

UAE markets, battered in the last two days, were shut for the country’s national day holiday, but Qatar’s bourse defied analyst expectations by climbing nearly five percent after plunging more than eight percent on Tuesday.

The Dubai debacle, which initially spooked global stock, debt and currency markets, has exposed the frailties of “quasi-sovereign” lending.

Foreign banks had lent to Dubai governmentlinked firms on the implicit understanding that they were backed by the UAE — the world’s third largest oil exporter that was flush with cash from a six-year boom in oil prices.

“Something that has irritated international investors is that the government distanced itself from Dubai World, which legally speaking is true, but morally speaking, they had gone out of their way before to make that tie,” one investor said. — Reuters