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Dubai’s debt: An unsolved mystery
EFG-Hermes says its $84.7 billion, but admits Dubai’s total debt may be significantly higher.
August 24, 2009 1:32 by Dana El Baltaji
Dubai’s total debt may be $84.7 billion, as opposed to the $80 billion the government quoted in 2008, according to an estimate by Egypt-based investment bank EFG-Hermes. Government-owned conglomerate Dubai World holds almost two-thirds of the loan, $60 billion.
“The $60 billion is very large and raises concerns and questions,” said Fahd Iqbal, an analyst at investment bank EFG-Hermes.
Nakheel was forced to reveal Dubai World’s debt as part of its obligations on a $3.5 billion sukuk due in December. It is unclear if the bonds will be refinanced or paid off.
“The fact that the government is not sending a message of unambiguous support for Nakheel raises doubt in the market regarding the extent to which the government will relieve investors of the substantial refinancing risks of Dubai Inc. generally,” Farouk Soussa, an analyst with ratings agency Standard & Poors, said to the Wall Street Journal.
The bank’s new debt estimate includes master-developer Nakheel’s loans, which amount to almost $1 billion, and the approximately $2 billion the Dubai Electricity and Water Authority (DEWA) owes.
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