Translate
2009-12-01
Dubai World unveils debt restructure plan
The government-owned company, Dubai World, has reassured investors abroad by revealing details of its restructuring plans, nearly a week after hinting it may not have enough money to repay its debts.
Dubai World says it will restructure $26 billion in debt, less than half of the nearly $60 billion it owes.
The new scheme will look at options for deleveraging, including asset sales, and will apply to the conglomerate's main property firms, Nakheel and Limitless. Its smaller companies will not be covered.
The head of Middle East research at Swiss-based financial firm UBS, Saud Masud, says it is a step in the right direction.
"I think, structurally this is a long-term positive with some short-term pain," Masud said.
Asian and European stocks were up, Tuesday, following news of the restructuring. However, it was a different story back in the United Arab Emirates, where the main indexes in Dubai and Abu Dhabi fell shortly after opening.
Both were down by about six percent, after recording even higher losses on Monday.
Masud says the situation has most people in the UAE feeling vulnerable.
"If you walk around and look at what the everyday person is thinking," Masud said. "They're clearly concerned with what restructuring or what type of debt renegotiation, will mean for them and their companies."
Dubai World helped transform Dubai into a regional hub for finance. It sent markets across the planet tumbling, last week, when executives asked creditors for a six-month extension on repaying its debts.
Monday, the emirate's government announced it would not provide the company with a bailout.
Officials say they want to set the record straight that, although Dubai owns Dubai World, the company is independent and not guaranteed by the government.
Dubai World's debts grew from projects initiated during Dubai's property boom, including man-made islands in the shape of palm trees and the world's tallest building.
Dubai World says it will restructure $26 billion in debt, less than half of the nearly $60 billion it owes.
The new scheme will look at options for deleveraging, including asset sales, and will apply to the conglomerate's main property firms, Nakheel and Limitless. Its smaller companies will not be covered.
The head of Middle East research at Swiss-based financial firm UBS, Saud Masud, says it is a step in the right direction.
"I think, structurally this is a long-term positive with some short-term pain," Masud said.
Asian and European stocks were up, Tuesday, following news of the restructuring. However, it was a different story back in the United Arab Emirates, where the main indexes in Dubai and Abu Dhabi fell shortly after opening.
Both were down by about six percent, after recording even higher losses on Monday.
Masud says the situation has most people in the UAE feeling vulnerable.
"If you walk around and look at what the everyday person is thinking," Masud said. "They're clearly concerned with what restructuring or what type of debt renegotiation, will mean for them and their companies."
Dubai World helped transform Dubai into a regional hub for finance. It sent markets across the planet tumbling, last week, when executives asked creditors for a six-month extension on repaying its debts.
Monday, the emirate's government announced it would not provide the company with a bailout.
Officials say they want to set the record straight that, although Dubai owns Dubai World, the company is independent and not guaranteed by the government.
Dubai World's debts grew from projects initiated during Dubai's property boom, including man-made islands in the shape of palm trees and the world's tallest building.
Dubai Government Will Not Back Dubai World Debts
A top finance official in Dubai says the emirate's government will not guarantee the debts of the heavily-indebted, state-owned conglomerate Dubai World.
Stock markets in Dubai and other parts of the United Arab Emirates plunged Monday, with investors concerned about Dubai's ability to pay back $59 billion in debt.
The Dubai market dropped 7.3 percent while Abu Dhabi's index tumbled 8.3 percent.
The director general of Dubai's Finance Department, Abdulrahman al-Saleh, says lenders bear some responsibility for the current crisis.
He says they lent money based on their assessment of the firm's projects, not because of government guarantees.
The official says while Dubai owns Dubai World, it has been known since the conglomerate was established that it was independent and not guaranteed by the government.
The debts grew out of Dubai's property boom, which included unique projects like palm-tree shaped islands and work on the world's tallest building. The once rapidly growing city-state has been hit hard by the global financial crisis.
The UAE stock exchanges opened Monday for the first time since Dubai World asked last week to delay debt repayments by six months. The markets had been closed for the four-day Muslim holiday of Eid al-Adha.
On Sunday, the UAE's Central Bank said it would make more loan money available to its banking sector in an effort to ease the crisis.
World stock markets dropped last week as investors worried the Dubai credit crisis could affect emerging economies and major banks with loans to the Gulf state.
Stock markets in Dubai and other parts of the United Arab Emirates plunged Monday, with investors concerned about Dubai's ability to pay back $59 billion in debt.
The Dubai market dropped 7.3 percent while Abu Dhabi's index tumbled 8.3 percent.
The director general of Dubai's Finance Department, Abdulrahman al-Saleh, says lenders bear some responsibility for the current crisis.
He says they lent money based on their assessment of the firm's projects, not because of government guarantees.
The official says while Dubai owns Dubai World, it has been known since the conglomerate was established that it was independent and not guaranteed by the government.
The debts grew out of Dubai's property boom, which included unique projects like palm-tree shaped islands and work on the world's tallest building. The once rapidly growing city-state has been hit hard by the global financial crisis.
The UAE stock exchanges opened Monday for the first time since Dubai World asked last week to delay debt repayments by six months. The markets had been closed for the four-day Muslim holiday of Eid al-Adha.
On Sunday, the UAE's Central Bank said it would make more loan money available to its banking sector in an effort to ease the crisis.
World stock markets dropped last week as investors worried the Dubai credit crisis could affect emerging economies and major banks with loans to the Gulf state.
Labels:
UAE Central Bank Ready to Back Banks
The Central Bank of the United Arab Emirates says it stands behind local and foreign banks that face losses if Dubai defaults on billions of dollars in debt.
The Central Bank issued a statement Sunday offering banks operating in the Emirates access to additional money. It also said the U.A.E.'s banking system is more sound than it was a year ago.
On Wednesday, Dubai said it would ask creditors to accept a six-month delay in repayments by state-owned holding company Dubai World. It owes about $60 billion.
World stock markets dropped on investors' fears that the Dubai credit crisis could affect emerging economies and European banks that made loans to the Gulf state.
Gulf stock markets will re-open Monday after an extended break for the Muslim holiday of Eid al-Adha.
The debts grow out of Dubai's property boom that produced the world's tallest building and other unique projects. The once rapidly growing city-state has been hit hard by the global financial crisis.
The Central Bank issued a statement Sunday offering banks operating in the Emirates access to additional money. It also said the U.A.E.'s banking system is more sound than it was a year ago.
On Wednesday, Dubai said it would ask creditors to accept a six-month delay in repayments by state-owned holding company Dubai World. It owes about $60 billion.
World stock markets dropped on investors' fears that the Dubai credit crisis could affect emerging economies and European banks that made loans to the Gulf state.
Gulf stock markets will re-open Monday after an extended break for the Muslim holiday of Eid al-Adha.
The debts grow out of Dubai's property boom that produced the world's tallest building and other unique projects. The once rapidly growing city-state has been hit hard by the global financial crisis.
India's Economy Grows at Fastest Pace Since Global Financial Crisis
"The initiatives taken by the government by providing stimulus and helping the generation of demand domestically has paid dividend" = Finance Minister Pranab Mukherjee
India's economy grew by 7.9 percent in the three months through September - its fastest pace since last year's global financial crisis. India, along with several other Asian economies, is recovering from the global slowdown.
Officials say the latest numbers show that the Indian economy is beating forecasts to grow at a faster-than-expected rate. The growth in the July to September quarter is the highest since April, last year.
Finance Minister Pranab Mukherjee says the recovery has been helped by government stimulus spending and a surge in manufacturing.
"One point is quite clear [is] that the initiatives taken by the government by providing stimulus and helping the generation of demand domestically has paid dividend," he noted. "And, corporate sector is also responding. The industrial growth is taking place. Negative growth of exports has come down. And, I do hope things will be okay."
The good news cheered stock markets. The benchmark Sensex index was up by about one-and-a-half percent, Monday, after the government released the new data.
But, as the economy picks up, the focus is now on how the government will handle inflation, which has been rising in recent months. Food prices have climbed by more than 12 percent, recently, adversely affecting millions of poor people in the country.
Most policy makers expect the government to raise interest rates in the coming months.
However, a top policy adviser to the government, Montek Singh Ahluwalia, says the government is unlikely to tighten monetary policy in the near future.
"At the moment, the main concern on the inflationary front, I think, is food prices and you know food prices are not something that is going to be affected by introducing a monetary squeeze," he said.
Although the global slowdown put the brakes on India's economy, it weathered the financial crisis better than Western countries. And, like other several other Asian economies, India now appears to be recovering quickly. Economists say Asia is leading the world out of recession, as countries like China, Singapore, and South Korea begin to post good growth in recent months.
India's economy grew by 7.9 percent in the three months through September - its fastest pace since last year's global financial crisis. India, along with several other Asian economies, is recovering from the global slowdown.
Officials say the latest numbers show that the Indian economy is beating forecasts to grow at a faster-than-expected rate. The growth in the July to September quarter is the highest since April, last year.
Finance Minister Pranab Mukherjee says the recovery has been helped by government stimulus spending and a surge in manufacturing.
"One point is quite clear [is] that the initiatives taken by the government by providing stimulus and helping the generation of demand domestically has paid dividend," he noted. "And, corporate sector is also responding. The industrial growth is taking place. Negative growth of exports has come down. And, I do hope things will be okay."
The good news cheered stock markets. The benchmark Sensex index was up by about one-and-a-half percent, Monday, after the government released the new data.
But, as the economy picks up, the focus is now on how the government will handle inflation, which has been rising in recent months. Food prices have climbed by more than 12 percent, recently, adversely affecting millions of poor people in the country.
Most policy makers expect the government to raise interest rates in the coming months.
However, a top policy adviser to the government, Montek Singh Ahluwalia, says the government is unlikely to tighten monetary policy in the near future.
"At the moment, the main concern on the inflationary front, I think, is food prices and you know food prices are not something that is going to be affected by introducing a monetary squeeze," he said.
Although the global slowdown put the brakes on India's economy, it weathered the financial crisis better than Western countries. And, like other several other Asian economies, India now appears to be recovering quickly. Economists say Asia is leading the world out of recession, as countries like China, Singapore, and South Korea begin to post good growth in recent months.
China Rebuffs EU Calls For Currency Reform
Chinese Premier Wen Jiabao has rejected an appeal from European leaders for faster currency reforms that would allow the Chinese yuan to rise in value. Mr. Wen's comments came after summit talks with the European Union.
Premier Wen Jiabao says China will take its own, gradual steps on currency reform, but for now, Beijing is more concerned with keeping the yuan, also known as the renminbi, broadly steady.
Mr. Wen says China will act to maintain the stability of the renminbi at what he describes as a "reasonable and balanced level."
The Chinese leader also said Monday that demands on Beijing to push up the yuan's exchange rate are not fair.
He says some countries that want the yuan to appreciate engage in what he described as "brazen trade protectionism against China" at the same time.
He did not mention any country by name. But China and the United States have been engaged in trade disputes over recent U.S. decisions to levy tariffs on Chinese goods like steel pipes and tires.
Since last July, China has held its currency to around 6.83 to the dollar to help its exporters weather the global credit crunch.
Mr. Wen made his comments when he and European leaders spoke to reporters Monday after their summit in the eastern Chinese city of Nanjing.
Climate change was high on the agenda for their meeting.
Swedish Prime Minister Frederik Reinfeldt, whose country holds the rotating European Union presidency, called on governments to make even greater efforts to address climate change.
"We need to stop the increase of global warming at two degrees, and so far, our belief is that the global efforts put on the table for mitigation is not enough to secure that we do not exceed the two degree target," said Mr. Reinfeldt. "So, more needs to be done."
Mr. Wen says China is serious about its efforts to combat climate change.
China recently vowed to cut the amount of carbon dioxide emitted per unit of economic output by 40 to 45 percent by 2020, compared with levels in 2005.
Carbon dioxide is one of the main greenhouse gases scientists believe contribute to global warming. While China's pledge will slow the pace of its emissions, it will not result in emissions that are lower than current levels.
Governments meet next week in Copenhagen to try to negotiate an agreement on cutting emissions and slowing global warming. It is not clear that they will succeed in reaching a binding agreement.
Subscribe to:
Posts (Atom)
50 Top Stories
Archive
Beyond the Headlines
BBC Business (Video)
World Markets
A Bitter Century: Armenian City Left Behind
Labels
Dubai
Dubai World
United Arab Emirates
Abu Dhabi
Asia
Asia Pacific Economic Cooperation
China
Economic Recovery
European Union
Finance
Financial crisis of 2007–2009
Free trade
Health Care
India
International Monetary Fund
Late-2000s recession
Montek Singh Ahluwalia
Pacific Rim
People's Republic of China
Timothy Geithner
U.S. Dollar
United States
Wen Jiabao