Dubai World likely to ask creditors for further extension to $22bn debt

DEBT-RIDDEN conglomerate Dubai World is expected to ask key creditors today for more time to pay off its loans, but leave them none the wiser concerning their prospects of being paid back in full.

Saddled with a $22 billion debt pile and in need of restructuring, the Gulf Arab emirate’s flagship company is expected to formalise a request for a payment standstill at a meeting with some 90 creditors at Dubai’s World Trade Center complex.

A steering committee of Dubai World’s largest lenders, consisting of Standard Chartered, HSBC, Lloyds, Royal Bank of Scotland, lenders Emirates NBD and Abu Dhabi Commercial Bank already met the company on December 7th.

Although important, the gathering will probably mark only an intermediate step in a lengthy process, with banking sources anticipating that no detailed proposals on the terms of the potential standstill to be discussed.

“Providing clarity is clearly the number one priority,” said Raj Madha, banking analyst at EFG-Hermes. “Obviously a standstill is not ideal, but a standstill with visibility of when payments will be received or the extent of these payments would be sufficient to call it a result.”

Lenders will take Dubai World’s requests back to their credit committees, which are expected to agree the standstill request early in the new year.

Dubai sent shockwaves through global markets on November 25th when it requested a standstill on $26 billion of debts linked to Dubai World and its two property units, Nakheel and Limitless. A $10 billion lifeline from neighbouring Abu Dhabi last week – the third to Dubai this year – helped it stave off default on a $4.1 billion Islamic bond, or sukuk, from Nakheel.

A local newspaper said yesterday that Dubai may still repay lenders in full, citing unnamed sources. The National daily said two top Dubai officials, on recent a confidence-building mission to Britain and the US, told financial leaders in London that repaying all bank loans in full “was discussed as a medium-term possibility”.

Sheikh Ahmed bin Saeed al-Maktoum, head of Dubai’s supreme fiscal committee, and Mohammed al- Shaibani, deputy head of the committee, met officials in London last week. – (Reuters)