$24.9bn Dubai World debt deal to be signed next week
Posted on 10 March 2011 with 2 comments from readers
The long delayed signing off of the $24.9 billion Dubai World debt restructuring deal will take place next week, chairman of DW Sheikh Ahmed bin Saeed Al Maktoum told reporters yesterday at the groundbreaking for the new $140 million Standard Chartered Bank building in Dubai.
He said the company now had 100 per cent support from its creditors. On possible asset disposals he commented: ‘We are not facing any pressure to sell Dubai World assets. We have a period of eight years. Always the question is asked, is an asset up for sale? Anything can be sold if the offer is good and tempting’.
DP World
Dubai Ports World is listed on the local stock market and there is speculation that a further tranche of the government’s stake will be sold in the future. News of the debt sign-off is old news, said analysts, and only a decision not to do it would have influenced the stock market.
However, when combined with news that Dubai is negotiating the sale of a stake in Dubai Aluminium to Abu Dhabi (click here) this is certainly a positive development for the balance sheet of the emirate which plunged more than $110 billion into the red after the global financial crisis.
At the event yesterday Standard Chartered’s CEO Peter Sands said: ‘We are very bullish on the economic outlook for the region with the business outlook in the UAE looking very promising.’
StanChart caution
Standard Chartered’s decision to invest at this time is significant but clearly its new headquarters will not be ready for sometime. If it was in a hurry there are many empty office towers that the bank could buy rather than build it own, though admittedly building costs are very low right now.
The Dubai Financial Market rallied on these statements but only modestly from a seven-year low. Both regional unrest and its possible impact on trade, and the possibility that global stock markets will now undergo a major correction, still hang over the market. Marc Faber predicts a three-month correction now (click here) so DFM bulls could be quickly burnt.
However, this will soon be the best moment to buy the DFM, or it may have just passed this week. It would certainly be a good buy after a global financial correction and the ArabianMoney investment newsletter will examine how and where to invest next month (sign-up here).
2 Comments posted by readers:
LOOK OUT! Spain downgraded one notch by Moody’s to AA2 with NEGATIVE outlook. The banks there may, repeat may, need a bailout of UP TO 120,000,000,000 euros under the most stressful scenarios. Their best current GUESS on the amount needed to recapitalize the Spanish banks is 40 to 50 BILLION euros. Source CNBC World TV. Moody’s said that the debt burden CAN be handled by the Spanish government without defaulting on the debt, or going to the European bailout fund. Time will tell. The Germans will have to come up with the promise of a LOT of cash pretty soon.
Get ready to hear about a terrible massacre, unless the West sends special forces with a few hundred Stingers and Javelins into Libya. (Amazing pieces of technology.) The Colonel’s heavy weapons and choppers appear to be winning now. It doesn’t look like we will be beating our swords into plowshares anytime soon. I’m liking the Atlantic & Pacific Oceans more every day. Canadian oil too.
I think they will give them something between 2-4% interest on the money that they owe them after 7 years lol.. As for the principal being paid off I would be quite surprised to hear them announcing something like a 50% payment now and another 50% after a few years or so. This usually only gets worse because when one doesn’t pay the other stops paying as well so it has a Domino affect. Below is an example of what I am talking about.
http://www.bloomberg.com/news/2011-03-10/dubai-world-s-drydocks-sued-in-singapore-for-not-paying-suppliers.html