Dubai’s debt: An unsolved mystery

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.

Pages: 1 2

Tags: debt, Dubai, Dubai World, EFG Hermes, government, nakheel

Previous Article Cover Story Next Article

Swine flu’s second wave may be coming
August 24, 2009 | Cover Story

Maintenance fees hurt
August 24, 2009

More on Cover Story

All Cover Story

2 Comments

Stephen Gaye on August 29, 2009 11:32 am

Look. Dubai could get itself out of debt in an instant. It has money, The ruler could sell his yacht and some of his inernational homes (loch ness, scotland). All this talk of Dubai going down the tubes is something that the government is ALLOWING.. Wake up you Nationals; Dubai is fading from the international stage, do you want that? Or just put your tribal issues aside, and let Abu Dhabi buy it. People really have no sympathy for all of this bellyaching.
Carolyn Miller on September 11, 2009 11:08 pm

For once as a financial analyst I am going to speak like a layman, for the laymen of Dubai. Thousands of people that were affected by this crisis and, thousands of people that continue to be affected by local sponsor issues with no recourse/justice get thrown in jail just because their rent check bounces. One has to pay a year’s rent upfront in Dubai, and during the same year you get laid off or something they cash your post dated check, it bounces and when you are about to leave the country you get stopped at immigration and thrown in jail. Now I would I be cruel to expect and want to see DUBAI be given the same medicine?? hell yeah! This is dedicated to the poor souls rotting Dubai prisons – for no fault of theirs!! Post dated check system, and retained by Dubai for their selfish, self-protection–now being bounced around on them.