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Affirming that the Dubai bubble has not burst, officials in the city accuse the media of wrongly equating Dubai World’s debts to the government.
December 1, 2009 2:36 by Aarti Nagraj
Although the UAE’s stock markets fell for the second consecutive day on Tuesday following news of Dubai World’s request for a six-month debt standstill, international markets have stabilized. The government-owned conglomerate Dubai World announced on Monday that it was restructuring around $26 billion worth of debt, including around $6 billion related to Nakheel’s sukuk.
“Dubai World intends to adopt a policy of regular communication and will provide further updates as this process develops,” a statement from the company said.
But the global media does not seem to be appeased; most international papers are still talking about the death of the emirate, blaming Dubai’s lack of transparency for the “bubble burst.”
But the bubble has not burst, insisted General Dahi Khalfan Tamim, the chief of Dubai Police reiterated on Monday.
“There are tens of Dubai-based national firms which are making huge successes worldwide,” he told the nation’s official news agency, WAM, adding that “reality investors” in the emirate were still safe from the global financial crisis. “Only speculative real estate investors have been affected by the slowdown in the sector,” he said.
He also said that the UAE’s banking sector was strong and that “local banks possess enough assets, adequacy, liquidity and reserves to continue fuelling the development process.”
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2 Comments
So let me get this right….billions of pounds are wipped off stock markets of those banks who BELIEVED Dubai would repay its debt when it said it would. Did the media get that wrong? Dubai’s ‘no one understands us’ stance is laughable. The internal workings of these quasi government entities (structuring of soverign verses non soverign debt) ie. Nakheel only comes to light when something like this happens. Such is the censorship that reporters get jailed, deported, threatened, if they try and report the real facts. So don’t lambast the foreign media for doing what local reporters can’t. If the government wanted to save the reputation of Dubai, it would have bailed the troubled entities out. How stupid that they didn’t. All the money spent on superlative PR on Dubai is now down the drain. The government may believe its own publicity but the rest of the world doesn’t. Sic.
I’ve just read this: if Dubai’s ruler wanted to get the country out of trouble, I’m sure he could raid his own piggy bank. Oh and er, the reported it$20 million spent on the National Day fireworks might have helped also;
Dec. 2 (Bloomberg) — The credit crisis in Dubai that shook world markets hasn’t stopped the country’s ruler Sheikh Mohammed bin Rashid al Maktoum from buying race horses.
Sheikh Mohammed was the top spender at the Tattersalls sales in Newmarket, England, on Nov. 27, two days after Dubai World, a state-run company grappling with $59 billion of liabilities, said it would ask creditors for a “standstill agreement” on its debt.
His advisers bought eight foals for a total of 1.12 million guineas ($1.95 million) for him as stock markets slumped around the world on concern over a default. His biggest purchase was a 260,000-guinea colt sired by Invincible Spirit.
“The horse side of the business is the private enjoyment of Sheikh Mohammed, so therefore has nothing whatever to do with the government, or government funds and the restructuring,” John Ferguson, his main bloodstock adviser and buyer, said in an interview at Europe’s biggest horse auctioneer yesterday.
Dubai’s announcement Nov. 25 that Dubai World would seek to delay debt repayments stoked concern that a potential default would set back the global financial system’s recovery. It triggered the biggest stock market slump in three months in Asia and Europe’s worst rout since April as the debt request risked adding to banks’ losses.
Stocks rallied from Shanghai to New York yesterday as Dubai said half of Dubai World’s obligations are “stable.” Dubai is in talks with its lenders to restructure $26 billion of debt, easing concern that a default would add to the $1.7 trillion financial companies around the world have written down as the credit crisis impaired the value of their assets.