stoje_i_patrze
26.11.09, 16:47
Dubai:
1.
Dubaj – nowa Argentyna, czy nowy Lehman?
Inwestorzy poczuli dreszcz na plecach. Jedna z gwiazd Emiratów Arabskich –
Dubaj – ma problemy ze spłatą swoich zobowiązań
www.rp.pl/artykul/2,397622_Dubaj___nowa_Argentyna__czy_nowy_Lehman_.html
2.
The emirate has a lot of explaining to do
It came in a short statement about the restructuring of Dubai World, one of
the emirate’s biggest and best-known companies, with the big news buried
towards the end.
But the decision to ask bondholders of the company and its most troubled
subsidiary, Nakheel, to extend maturities from December to May 2010 was a
bombshell. And the Middle East’s most glamorous and creative emirate will pay
the price of its decision for a long time to come.
For months, all indications in Dubai were that the heavily indebted
city-state, symbol of the rise of the region as an economic powerhouse as much
as of the excesses of the pre-financial crunch days, would meet the
obligations of the companies it owns, and that Nakheel’s $4bn debt due in
December would be repaid.
Only a few weeks ago, bankers in the region were so upbeat some had suggested
that Dubai might not even need to raise more funds to pay debts due this year.
It helped of course that the emirate was showing signs of recovery, with fewer
expatriates packing their bags than had been expected, retail sales on the
rise and the real estate sector, devastated by the economic crisis, beginning
to stabilise. The government itself looked confident too, and it went to the
markets to raise funds, bringing in $2bn in Islamic bonds last month.
As always, though, the problem in Dubai is that no one had all the facts, and
perhaps some in the financial community had all the wrong assumptions. The
whole affair, one financial analyst told me on Thursday, was “typical of the
way things work in Dubai – top down and in a vacuum, and that makes it very
difficult for investors”.
True, top officials had indicated repeatedly that Dubai would not default on
its debt – and Nakheel, developer of the extravagant Palm real estate project,
was too important for Dubai to allow it to default. What officials have not
explicitly said, however, was that the repayments would be made on time.
Interestingly, moreover, the prospectus that Dubai recently issued to test
market appetite for government bonds said that the government was “not legally
obliged” to meet the obligations of related entities – what is commonly
referred to as Dubai Inc – but might at its sole discretion decide to extend
such support. Most of the funds raised in the past year – including from Abu
Dhabi banks on Wednesday, the same day that Dubai said it intended to call a
“standstill” until May 30 on all its Nakheel and Dubai World debt due in
December – were by the government itself, rather than individual companies.
So what was Sheikh Mohammed bin Rashid, Dubai’s ruler, up to on Wednesday? Was
he indicating, as some suggest, that the government would allow some of
Dubai’s bad companies to suffer in order to save the good ones? Was he simply
trying to force the hand of the Dubai World bondholders to buy himself some
time and leave open the option of repaying the debt next month if forced to?
Whatever his intention, the way Dubai has gone about its financial business
has dealt a severe blow to its reputation. Bankers and investors are furious,
feeling they were led on the wrong path.
“The credibility of these guys has been found wanting,” said one senior
analyst at an international bank. “Whether there is a default or not the
biggest issue is going to be credibility.”
Analysts, meanwhile, were scrambling to reconsider the assessments they had
recently made about Dubai.
Hugely damaging was that the assumption that Abu Dhabi would always stand by
Dubai and its flagship companies suddenly became unsustainable. “The
credibility of Abu Dhabi to support Dubai with respect to its financing needs
is dented, in our view, eroding the main pillar of Dubai’s creditworthiness,”
said one financial institution in a note.
Was this perhaps Abu Dhabi’s way of taking its revenge on Dubai for all the
mistakes during the boom years? I seriously doubt it. The rivalry between the
two emirates is less important than the impact of Dubai unravelling. The cost
of insuring Abu Dhabi debt went up on the Dubai announcement on Wednesday and
continued to rise on Thursday. And, it has to be remembered that many of Abu
Dhabi’s companies are exposed to Dubai, having been some of the most
enthusiastic investors. Whatever Dubai is up to, it needs to explain itself –
and do it before even more damage is wreaked on its credibility.
www.ft.com/cms/s/0/5ad63b00-da79-11de-9c32-00144feabdc0.html
Dubai Debt Delay Rattles Confidence in Gulf Borrowers
Nov. 26 (Bloomberg)
