DUBAI: Government-owned Dubai World will meet its main creditors next week to discuss a request to delay payment on $26 billion in debt that has shaken global markets and confidence in the Gulf Arab business hub.
Dubai’s problems had raised fears of a renewed global crisis, but there was little evidence of concern on the streets, where thousands of balloons in the black, white, green and red of the United Arab Emirates flag were released to mark the federation’s national day.
Next week’s meeting would be Dubai World’s first formal talks with key lenders since the conglomerate that spearheaded the emirate’s rapid growth disclosed its debt woes on Nov 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 local lenders Emirates NBD and Abu Dhabi Commercial Bank were on the creditors panel.
The banks did not immediately confirm their participation on the committee but an Asian-based banking analyst said the six banks were likely to be among those with greatest exposure to Dubai World, which ran up its debts during a property boom that turned to bust with the global financial crisis last year.
A source at a Dubai-based bank confirmed the makeup of the panel.
Dubai World has asked creditors for a six-month standstill on the debt of its property subsidiaries Limitless and Nakheel, developer of three palm-shaped islands that once lured wealthy expatriates and even celebrities.
The most urgent question is the fate of Nakheel’s $3.52 billion Islamic bond, which matures on Dec. 14. British law firm Ashurst said it was named legal adviser to Nakheel bondholders who account for 25 percent of the bond.
Dubai said the government would not guarantee the debts of Dubai World, whose overall liabilities total almost $60 billion, including those of units not part of the restructuring.
The International Monetary Fund said on Tuesday that banks from Britain are the most exposed to the conglomerate which was at the forefront of Dubai’s expansion plans and boasts the motto “The Sun Never Sets on Dubai World.”
Dubai transformed itself from a sleepy desert backwater into the trade and tourism hub of the world’s biggest oil-exporting region with sprawling malls, skyscrapers and luxury villas that attracted celebrities and the super-rich.
Gulf stock markets steadied on Wednesday after heavy losses in the previous two days, in the absence of fresh developments in the Dubai debt crisis and as the UAE markets were closed.
Qatar’s Doha Securities Market added more than 350 points to close 5.3 percent higher, regaining most of the losses it sustained on the previous day when it plunged 8.3 percent.
The DSM index still closed below the 7,000-point psychological barrier at 6,949.19 points. However, it surpassed the end-2008 close of 6,886.12 points. All four sectors made gains, led by banks after several lenders said they were not exposed to the Dubai debt crisis.
The Kuwait Stock Exchange closed at 6,650.80 points, down 1.4 percent to a nine-month low after fluctuating sharply at the start of trading.
The market plunged 2.7 percent on Tuesday on fears of the impact of Dubai debt problems on Kuwaiti firms.
Only the insurance firms were higher while the remaining seven sectors dropped, including the leading banking sector which lost 0.75 percent. Investment firms dropped 2.3 percent.
The fall in the Kuwaiti market came despite assurances of support by the government and the central bank, and after dozens of listed firms said in statements they were not exposed to Dubai debt.
The Kuwaiti market had been sliding even before the Dubai debt announcement, because of political tensions between the government and Parliament.
The tiny Bahrain Stock Exchange, which reopened on Wednesday after a six-day holiday, eased just 0.12 percent amid quiet trading.
Kuwait and Bahrain markets are the only Gulf bourses to be trading below their 2008 close.
The stock markets of Saudi Arabia and Oman are still on holiday, while the bourses of Dubai and Abu Dhabi are closed for the United Arab Emirates national day.
