Dubai financially sound …capable of repaying debts

Dubai is financially sound and capable of repaying its debts, a senior government official said yesterday, aiming to quell any doubts about the emirate’s ability to meet it obligations.

Dubai, which boasts of the tallest tower in the world and palm shaped man-made islands, had racked up billions of dollars in debt to finance its ambitious growth during the boom years, but the global financial crisis in 2008 crashed its property market and left several business plans in tatters.

It has since restructured some of its flagship companies and the economy continues to strengthen on the back of a sharp recovery in tourism and trade as Dubai benefits from its safe haven status amid political unrest elsewhere in the region. Its property market is also seeing signs of recovery.

But concerns remain and many observers believe that the emirate may have to tap its oil-rich neighbour Abu Dhabi again as billions come due over the next few years.

“This is absolutely not true. It’s nothing like that. When the time comes that we have to pay, we will stick to our plan. Dubai is  financially sound and is capable to pay,” Sheikh Ahmed bin Saeed al-Maktoum, the chairman of Dubai’s Supreme Fiscal Committee, told Zawya Dow Jones yesterday.

Dubai’s total direct debt, including a $10bn facility from Abu Dhabi that is fully drawn, amounted to about $33bn, according to the emirate’s latest bond prospectus. But this does not include the money that some its related entities owe and the emirate guarantees.

Dubai Group, a holding company owned by the emirate’s ruler with interests in property and financial services, is in talks with its creditors to finalise a $10bn debt restructuring, according to people familiar with the matter.

“I hope that the Dubai group management would be able to reach an agreement with all the [creditors] which will be good for both sides… And which will bring that company back. I am very positive about it [restructuring],” Sheikh Ahmed said.

Source: Caye Global News, Gulf Times

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