Dubai royal fam­ily de­fends debt re­quest

De­ci­sion to freeze shocks mar­kets

Weekend Argus (Saturday Edition) - - WORLD -

DUBAI: A top Dubai fi­nance of­fi­cial said the emi­rate fully ex­pected fall­out from its debt prob­lems and as­sured for­eign cred­i­tors that Dubai World’s re­quest to post­pone pay­ment on some of its $ 60 bil­lion (R450bn) in debt was “care­fully planned”.

World mar­kets yes­ter­day re­acted in shock and dis­may to what some an­a­lysts in­di­cated amounted to a de­fault by Dubai World, t he citys­tate’s key en­gine of growth with in­ter­ests rang­ing from ports to real es­tate.

Sheik Ahmed bin Saeed AlMak­toum, the chair man of Dubai’s Supreme Fis­cal Com­mit­tee, said t he emi­rate’s lead­er­ship had thought long and hard, weigh­ing cred­i­tors’ in­ter­ests, be­fore an­nounc­ing t hat t hey were seek­ing a “stand­still” on Dubai World’s debt un­til at least May.

“ Our in­ter­ven­tion in Dubai World was care­fully planned,” said Ahmed – a mem­ber of t he emi­rate’s rul­ing royal fam­ily – on Thurs­day.

“The gov­ern­ment is spear­head­ing the re­struc­tur­ing of this com­mer­cial op­er­a­tion in the full knowl­edge of how the mar­kets would re­act.”

The Dubai gov­ern­ment said on Wed­nes­day – the eve of a three-day Is­lamic feast – it would re­quest the de­lay in Dubai World’s debts, as well as those of real-es­tate ar m Nakheel, which has a roughly $3.5bn Is­lamic bond com­ing due in De­cem­ber.

The fall­out from the brief state­ment came swiftly, and was felt around the world.

Oil prices dropped near US$ 74 a bar rel i n Asia yes­ter­day as in­vestors cur­tailed their risky bets on com­modi­ties amid un­cer­tainty over the ex­tent of Dubai’s fi­nan­cial woes.

“We un­der­stand the con­cer ns of the mar­ket and the cred­i­tors in par­tic­u­lar,” Ahmed said.

He called t he Dubai World’s debt freeze re­quest a “sen­si­ble busi­ness de­ci­sion” and said that Dubai’s lead­er­ship had been forced to in­ter­vene when it did “be­cause of t he need to take decisive action to ad­dress its par­tic­u­lar debt bur­den”.

A year af­ter t he global down­tur n de­railed Dubai’s ex­plo­sive growth, the semi- au­ton­o­mous city-state known for its man-made is­lands, the world’s tallest tower and in­door ski slope has been grap­pling with its debt load.

It has is­sued bonds that have been bought up by both the United Arab Emi­rates’ cen­tral bank and, most re­cently, two banks ma­jor­i­ty­owned by neigh­bour­ing Abu Dhabi, the oil-rich emi­rate home to the UAE’s fed­eral gov­ern­ment.

The an­nounce­ment of the debt-de­lay re­quest ap­pears to have l argely eclipsed any as­sur­ances by the emi­rate’s ruler, Sheik Mo­hammed bin Rashid Al-Mak­toum, who had con­tin­u­ally dis­missed con­cer ns over t he city-state’s liq­uid­ity.

Ahmed serves as the chair­man of the Emi­rates air­line, said claims that Dubai over­reached dur­ing t he good times were un­jus­ti­fied.

Ahmed said t hat t he un­prece­dented growth over the past decade “helped lay the foun­da­tion for what is now a broad-based sus­tain­able econ­omy”.

“The eco­nomic fun­da­men­tals, such as our highly de­vel­oped i nfrastructure, will en­sure Dubai re­mains an at­trac­tive re­gional mar­ket,” Ahmed said. – Sapa-AP

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