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Abu Dhabi’s TDIC delays bond, sees higher 2011 loss

Says bond may be delayed to Q4 or 2012 when mkts improve; Co trims 2011 budget by 5 bln dirhams; Expects higher 2011 loss

July 19, 2011 8:58 by

Abu Dhabi’s Tourism Development Investment Co (TDIC) will explore alternative funding options after putting off a planned bond sale until at least the fourth quarter, its chief financial officer said on Monday.
Government-owned TDIC, tasked with bringing branches of the Louvre and Guggenheim museums to Abu Dhabi, recently completed roadshows for the potential bond issue but delayed the sale due to market conditions.
“We will issue in Q4 if markets stabilise, if not then next year. We don’t need the money right now. From a capital management point, it made sense to wait,” Shaun O’Connor, chief financial officer, told reporters.
O’Connor also said the company’s net loss would widen in 2011 and said its yearly budget had been cut by 5 billion dirhams ($1.4 billion) as part of a strategy to prolong its project delivery schedule amid a market downturn.
The company, which made a net loss of 1.2 billion dirhams in 2010, expects a higher loss this year as five new projects come on stream. O’Connor attributed the 2010 loss to depreciation on new buildings and higher staffing costs.
“We will continue to be a net cash user for the next five to seven years,” he said, adding TDIC was exploring other funding options including tapping commercial banks. “Banks are willing to lend, the rates are good.”
Though opportunistic issuers have sought to take advantage of narrowing spreads for UAE credits to price bonds attractively despite regional political upheaval, concerns have resurfaced about Eurozone sovereign debt.
This has forced some borrowers to wait until conditions stabilise, including the UAE’s Dolphin Energy and mall developer Majid Al Futtaim (MAF) Holding.
Abu Dhabi has plans to curtail bond sales by state companies and review the investments they hold to ease the sale of sovereign bonds and ensure the firms’ actions benefit the economy.           (Editing by Dinesh Nair and David Holmes)

By Stanley Carvalho and Rachna Uppal

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