Dubai may use a wide range of strategies, from asset sales to increased bond issues and continued support from Abu Dhabi, to get through a looming period of debt repayments - but it may cause its bankers a few sleepless nights on the way.
The emirate survived its 2009 debt crisis largely by restructuring obligations of state-linked firms, pushing them several years into the future. Many of those obligations will come due between 2014 and 2016, saddling Dubai with tens of billions of dollars of payments.
Statements by government officials in recent weeks suggest Dubai is assembling a mix of steps to handle the approaching debt hump, addressing the problem from many angles. Strong bond and equity prices show investors think these steps will succeed.
But the emirate has still not explained clearly how it will find all the money it needs - and in particular, how state-owned investment firm Dubai World will meet its debts.
"Little progress has been made on clarifying and strengthening the legal framework for insolvencies/debt restructuring, while details of the Dubai government's capacity to support its government-related institutions remain uncertain," credit rating agency Moody's Investors Service said in a March report.
This worries the banking community, said a senior Dubai-based banker from an institution owed money by Dubai World.
"I'm on the pessimistic side as I see Dubai doing very well in everyday life - at the airport, tourism numbers up, real estate prices going up - but I've still not seen anything on Dubai World," he said, declining to be named because of the commercial sensitivity of his remarks.
"There is still time to go but we don't hear anything. It's worrying."
Standard Chartered bank estimates Dubai and its government-related entities (GREs) - companies and agencies backed by the state - have around $48 billion of debt obligations coming due between 2014 and 2016.
Although Dubai has recovered strongly from the crisis, economic growth alone will not provide nearly enough money to repay those debts, and the emirate appears to have little room to boost its cashflow.
The emirate's government is running a small budget deficit and while Dubai receives dividends from profitable state-owned firms, the numbers aren't huge; Emirates airline and the Dubai Electricity and Water Authority each paid AED500m ($136m) of dividends last financial year. Funds from its road toll system and receipts from its hugely profitable duty free operations have already been securitised.
Raising any large amount of money from new taxes or fees, or higher rates for existing taxes, is not on the cards since it could hurt Dubai's competitiveness in a region where taxes are very low, officials have said privately.
The first big payment coming due is money lent to Dubai during the crisis by a deep-pocketed neighbour. The Dubai Financial Support Fund (DFSF) borrowed a total of $20bn from Abu Dhabi and the federal government of the United Arab Emirates: $10bn from the UAE central bank and $5bn each from two state-owned banks in Abu Dhabi, National Bank of Abu Dhabi and Al Hilal Bank.
This five-year debt will come due in November 2014. Since the DFSF lent essentially all of the money on to needy Dubai GREs, it is unlikely to be able to repay all of the debt next year, or even a large part of it.
For example, the DFSF is one of the main creditors to Amlak Finance, a troubled Islamic real estate lender which is still trying to renegotiate $1.9bn of debt with local and foreign banks before resuming operations.
Most commercial bankers assume the Abu Dhabi debt will not be a problem. They note Abu Dhabi still has an interest in preserving Dubai's financial stability, and expect all or most of the $20bn liability to be rolled over quietly for a further several years by the Abu Dhabi government and banks.
In order to buoy financial market sentiment and demonstrate it has recovered from its crisis, Dubai could make a modest, partial repayment to Abu Dhabi next year, Bank of America Merrill Lynch analysts said in a research report.
Subsequent debt maturities may not be so comfortable for Dubai, however. In May 2015, for example, Dubai World will be required to repay a $4.4bn loan from banks.
When Dubai World's $25bn debt restructuring was agreed with banks in 2011, it was envisaged that the conglomerate would raise most of the money it needed through asset sales.
According to a restructuring document seen by Reuters, $1.3-2.3bn was to be raised in 2010-2012 through the disposal of Britain's P&O Ferries and warehouse developer Gazeley, with another $3.9-$5.3bn generated in 2013-2015 through sales of holdings such as US department stores Barneys and Loehmann's, as well as MGM Resorts International.
Asset sales have not been as quick and easy as hoped, partly because of the global financial crisis. P&O and Gazeley have not been sold, while Dubai World lost control of Barneys in May 2012 as part of a restructuring at the US retailer.
In an interview with Reuters on Tuesday, Dubai World chairman Sheikh Ahmed bin Saeed al-Maktoum, a close advisor and uncle to Dubai's ruler, acknowledged that some asset sales might be delayed.
He said this would happen if the emirate felt it could get a higher price if it waited; "we might see in six months to one year, things will be better." In that case, Sheikh Ahmed said, Dubai would study an alternative plan to finance debt payments.
"We will look at something like this. I can't specify what, since it's confidential information because of the restructuring," he said when asked if an alternative to asset sales was in place.
One option for Dubai would be to force bank creditors back to the table for another round of debt restructurings when the Dubai World loan and other payments come due.
Comments by government officials, however, suggest Dubai wants to avoid more restructurings - partly because of the blow to its prestige as a financial centre - and believes it can.
"Definitely we will not see another 2009 happening," Mohammed al-Shaibani, chief executive of Investment Corp of Dubai (ICD), a sovereign wealth fund, told Reuters in March.
Another option would be to issue more bonds. The Dubai government attracted massive investor demand when it sold $1.25bn of Islamic and conventional bonds in January; a $750m, 10-year tranche got $11bn of bids.
Sheikh Ahmed said more bond sales were possible. "The market is right, the price is right, then why not?" he said when asked if another issue could happen this year.
By themselves, however, stepped-up bond issues by the government and GREs might raise several billion dollars, not enough to meet all of Dubai's debt payments, bankers estimated. The same is true for the loan market.
Securing funds from local banks, which are flush with cash as the economy recovers, is one way that Dubai GREs have met tricky repayments recently; DIFC Investments and the Jebel Ali Free Zone Authority used loans heavily backed by local banks to refinance obligations last year.
But this strategy has limits, particularly because the UAE central bank says it is determined to impose limits on banks' exposure to state-linked borrowers, as a way to limit the risk of another crisis.
The central bank suspended the limits last year after protests from commercial banks, but it has said it wants to revive them this year. Many of the UAE's largest banks would become unable to take on additional debt from Dubai GREs.
That may encourage Dubai to explore partial privatisations as a way to strengthen state finances. The ICD's Shaibani said the emirate expected to offer at least one flagship asset to the public as early as next year to stimulate investment and burnish Dubai's role as a global trading hub.
"2014-2015 should be a fantastic time for IPOs. I can see potential for an IPO of one or two big government-owned entities," he said.
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