Dubai: Dubai World will meet its main creditors next week to discuss the restructuring of $26 billion of its debt.
The meeting would be the first formal encounter between Dubai World and key lenders since the conglomerate that spearheaded Dubai's rapid growth announced its decision to restructure on November 25.
An Abu Dhabi bank executive, who asked not to be named, said London-listed Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland, along with some local lenders were on the creditors panel.
The banks did not immediately confirm their participation on the committee that an Asian-based banking analyst said was likely to reflect those with greatest exposure to Dubai World. But a source at a Dubai-based bank confirmed the makeup of the panel.
Dubai World has asked creditors of its flagship property firm Nakheel, developer of three palm-shaped islands in Dubai, for a six-month debt repayment ‘standstill' as part of a restructuring plan.
Nakheel's $3.52 billion Islamic bond matures on December 14.
Dubai has said the government will not guarantee the debts of Dubai World, whose overall liabilities total almost $60 billion. The International Monetary Fund said on Tuesday that banks from Britain are the most exposed to the conglomerate.
UAE markets, battered in the last two days, were shut for the National Day holiday, but Qatar's bourse defied analyst expectations by climbing nearly five per cent after plunging more than eight per cent on Tuesday.
Solid economy
"The economy of the UAE is solid and is based on proper foundations and is able to face challenges no matter how difficult they might be," Minister of Economy Sultan Bin Saeed Al Mansouri said in remarks on National Day.
Meanwhile, the cost of insuring Dubai sovereign debt eased further yesterday on relief the emirate would restructure a smaller amount of debt than expected, with five-year credit default swaps (CDS) quoted down 120 basis points from the start of this week, according to CMA DataVision.
CDS were quoted at 453 bps from a Tuesday close of 460 points and a Monday close of 570 points, CMA said.
This means it costs $460,000 to insure $10 million of Dubai sovereign debt for a five-year period.
Dubai five-year CDS peaked at around 680 points last Friday. The cost of insuring debt from Dubai Ports World for five years also slipped three points to 514, also much lower than the 643 points quoted at close of trade on Monday.
The $3.52 billion sukuk bond for Nakheel, maturing this month, one of the issues to be restructured, actually rose two points but is trading at just 55 points.
European finance ministers said on Tuesday that Dubai World's debt restructuring would have little impact on their region. "What we understand today is there is no systemic risk," French Economy Minister Christine Lagarde said.
"It's not a drama for the financial world," she told reporters after a regular meeting with fellow ministers from the euro zone and said European Central Bank President Jean-Claude Trichet had reassured ministers that "there is little consequence for European banks".
Similar reassurances came from Luxembourg's Jean-Claude Juncker, chairman of the meeting. "The fallout will be very minor and there is no cause for concern there," he said.
'Normal business'
Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, stated yesterday that debt restructuring is a normal business response and the decision by Dubai World to tackle its debts is in the right track and proves the transparency of Dubai in addressing the concern.
Al Mansouri said that the Dubai economy has scored strategic achievements locally and internationally. "Dubai is an integral part of the United Arab Emirates, the second largest Arab economy," he said.
On the media response to Dubai World, Al Mansouri said: "We are surprised by this negative campaign on the UAE and Dubai. The city has accomplished a strong track-record of growth that would have taken decades for other countries to achieve". Al Mansouri said Dubai World's debts do not affect the economic performance of Dubai or the UAE and it is a matter of time before the company restructures its debts and honours its commitments as per a scheduled plan.
The meeting would be the first formal encounter between Dubai World and key lenders since the conglomerate that spearheaded Dubai's rapid growth announced its decision to restructure on November 25.
An Abu Dhabi bank executive, who asked not to be named, said London-listed Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland, along with some local lenders were on the creditors panel.
The banks did not immediately confirm their participation on the committee that an Asian-based banking analyst said was likely to reflect those with greatest exposure to Dubai World. But a source at a Dubai-based bank confirmed the makeup of the panel.
Dubai World has asked creditors of its flagship property firm Nakheel, developer of three palm-shaped islands in Dubai, for a six-month debt repayment ‘standstill' as part of a restructuring plan.
Nakheel's $3.52 billion Islamic bond matures on December 14.
Dubai has said the government will not guarantee the debts of Dubai World, whose overall liabilities total almost $60 billion. The International Monetary Fund said on Tuesday that banks from Britain are the most exposed to the conglomerate.
UAE markets, battered in the last two days, were shut for the National Day holiday, but Qatar's bourse defied analyst expectations by climbing nearly five per cent after plunging more than eight per cent on Tuesday.
Solid economy
"The economy of the UAE is solid and is based on proper foundations and is able to face challenges no matter how difficult they might be," Minister of Economy Sultan Bin Saeed Al Mansouri said in remarks on National Day.
Meanwhile, the cost of insuring Dubai sovereign debt eased further yesterday on relief the emirate would restructure a smaller amount of debt than expected, with five-year credit default swaps (CDS) quoted down 120 basis points from the start of this week, according to CMA DataVision.
CDS were quoted at 453 bps from a Tuesday close of 460 points and a Monday close of 570 points, CMA said.
This means it costs $460,000 to insure $10 million of Dubai sovereign debt for a five-year period.
Dubai five-year CDS peaked at around 680 points last Friday. The cost of insuring debt from Dubai Ports World for five years also slipped three points to 514, also much lower than the 643 points quoted at close of trade on Monday.
The $3.52 billion sukuk bond for Nakheel, maturing this month, one of the issues to be restructured, actually rose two points but is trading at just 55 points.
European finance ministers said on Tuesday that Dubai World's debt restructuring would have little impact on their region. "What we understand today is there is no systemic risk," French Economy Minister Christine Lagarde said.
"It's not a drama for the financial world," she told reporters after a regular meeting with fellow ministers from the euro zone and said European Central Bank President Jean-Claude Trichet had reassured ministers that "there is little consequence for European banks".
Similar reassurances came from Luxembourg's Jean-Claude Juncker, chairman of the meeting. "The fallout will be very minor and there is no cause for concern there," he said.
'Normal business'
Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, stated yesterday that debt restructuring is a normal business response and the decision by Dubai World to tackle its debts is in the right track and proves the transparency of Dubai in addressing the concern.
Al Mansouri said that the Dubai economy has scored strategic achievements locally and internationally. "Dubai is an integral part of the United Arab Emirates, the second largest Arab economy," he said.
On the media response to Dubai World, Al Mansouri said: "We are surprised by this negative campaign on the UAE and Dubai. The city has accomplished a strong track-record of growth that would have taken decades for other countries to achieve". Al Mansouri said Dubai World's debts do not affect the economic performance of Dubai or the UAE and it is a matter of time before the company restructures its debts and honours its commitments as per a scheduled plan.
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