Dubai denies debt refinancing concerns
Source: BI-ME , Author: BI-ME staff
Posted: Sat October 11, 2008 12:00 am

UAE. The Dubai government has denied  that it could face problems with refinancing part of its debt as global markets tumble the Financial Times reported.

Nasser al-Sheikh, Director General of the government’s Finance Department, told the FT that he had a clear view of the debt requirements for every part of the Dubai government.

Analysts are concerned about Dubai’s level of debt finance to pay for expansion. "Ratings agencies have estimated debt levels at 60% of gross domestic product, although analysts privately say it is far higher," according to the FT.

People are worried whether the big Dubai names will be able to roll over their debt, especially those who are related to real estate,” Ibrahim Masood, a senior investment officer at Mashreqbank, was quoted as saying last week.

“Given the level of growth we’ve seen, there must have been a large amount of funding raised to fuel that growth, and the funding is not of an indefinite maturity."

"The credit prices for guys like Dubai Holdings are so high right now, that people are beginning to take a serious look at whether those guys will be able to roll over the debt when it reaches maturity," said Massood

Sheikh concedes that refinancing might have become more expensive, but he says international markets are exaggerating default risk in the Gulf, and believes Dubai has enough funds to meet the repayments.

Analysts also point out that the oil-rich capital of the United Arab Emirates, Abu Dhabi, could bail out any Dubai entities that face funding problems, dipping into the hundreds of billions of dollars held by its sovereign wealth funds.

"Were the money shortage to reach a point where large government-related bodies such as DP World and Nakheel could not refinance their debt, the UAE government would almost certainly come to their rescue with the necessary cash," Farouk Soussa, a credit analyst at Standard and Poor’s, said.

 

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