Dubai, facing debt repayments of about $50bn over the next three years, is finally getting serious about selling off assets to raise money - a key component of its repayment strategy.
Most investors are now confident that the freewheeling emirate will recover from its 2009-2010 crisis, when a property crash nearly forced state-linked companies to default on billions of dollars of debt.
But until recently, most of the big companies had not followed through on their plans to sell assets as part of debt restructuring deals with creditors. This left a question mark over exactly where Dubai Inc would find the money it needed.
In the last few weeks, however, several asset sales have been announced and there has been progress towards more - a sign that the emirate is able to make some of the tough commercial decisions required by the restructuring plans.
Instability in the global debt markets during this period has blocked any further rally in Dubai debt prices, but they may gain support from news of the asset disposals.
"The fact that concrete action is being taken, and being managed with relatively little visible turbulence, is seen as a positive by the investment community," said Biswajit Dasgupta, head of treasury and trading at Abu Dhabi asset manager Invest AD.
"The debt burden will come down as a result of these. But equally, there is a sense of greater discipline going forward in that projects will be subjected to more rigorous scrutiny for commercial viability."
Dubai's state-linked conglomerates snapped up a spectacular array of assets around the world, from stakes in high-profile companies to real estate, before the global financial crisis of 2008 triggered a crash in the emirate's property market.
Many firms restructured their debt by extending maturities while promising full repayment through asset sales. Chief among these was Dubai World, which in a $25bn restructuring deal signed in March 2011, set a two-tranche repayment schedule with lenders over five and eight years.
The plan depends heavily on asset disposals to raise money; it envisioned the conglomerate raising $1.3-$2.3bn in this way by 2012. That did not happen and until last month, Dubai World had not actually sold any major assets - a source of some worry to its bankers.
Many bankers believed Dubai, hoping to fetch higher prices, was waiting for the global economy to recover further from its crisis before selling assets. This strategy could backfire if the recovery did not materialise.
Some worried that Dubai managers might simply be unwilling to let go of their prize assets, for fear of booking losses on those bought at the top of the market; in that case, their stubborness could jeopardise the restructuring programmes. Others feared Dubai's partial recovery from its property slump might have lulled it into a false sense of complacency.
But since last month, several actions have suggested such fears are misplaced. A unit of Toronto-based investment firm Brookfield Asset Management bought logistics warehouse developer Gazeley from Dubai World subsidiary Economic Zones World (EZW), the Canadian firm said.
Dubai World had purchased Gazeley from Wal-Mart Stores in 2008 for an estimated 300 to 400 million pounds ($453-604m). The price of the sale to Brookfield was not disclosed, but falls in asset prices since 2008 mean the sale may have occurred at a lower price.
Proceeds from the sale of Gazeley are expected to go towards the repayment of a $1.2bn loan secured by Dubai World affiliate JAFZA in June last year. EZW had pledged up to $300m for JAFZA from proceeds raised by the Gazeley sale, and the funds will be used to part-repay the bank facility, according to a company prospectus.
Meanwhile Dubai Group, a unit of Dubai Holding which is restructuring $10bn in debt, sold its credit card business to Abu Dhabi's First Gulf Bank for $164m last month.
And the Tunisian government said another unit of Dubai Holding was considering a sale of its 35 percent stake in Tunisie Telecom; the unit bought the stake for $2.25bn in 2006. Dubai Holding has also hired Citigroup to advise on a potential sale of its remaining 26 percent stake in mobile telephone retailer Axiom Telecom, bankers said.
Some bankers think Dubai is acting now because global market volatility since late May, due to signs that US interest rates will rise, has persuaded it to lock in deals for fear of losing opportunities. Others believe that with Dubai World facing a $4.4bn loan repayment in May 2015, managers have decided they can wait no longer.
"What we are seeing is that there is a bit more receptiveness to the idea of selling assets in Dubai," said a banker who has previously advised Dubai firms on acquisitions. He declined to be named because of commercial sensitivities.
"It's not like they are willing to put everything on the block, but they are looking at assets closely and saying 'which of these can we sell and realise some value?'"
The recent sales will not by themselves be nearly enough to meet Dubai Inc's obligations. Other big Dubai World assets have been earmarked for sale under its restructuring plan, including stakes in MGM Resorts and Inchcape Shipping Services.
Some of the toughest sales lie ahead; disposals of strategic stakes in companies operating within Dubai are envisioned for 2016-2018, with estimated proceeds of $9.8-$11.8bn. It may be much more painful for Dubai World to exit such core firms.
Gus Chehayeb, director for Middle East and African corporate research at investment bank Exotix, estimated the debt of Dubai's government-related enterprises (GREs) remained above 100 percent of the emirate's gross domestic product, despite a strong economic rebound in the last few years.
"The larger sales have usually been by Dubai's healthier GREs while some small disposals were completed by the truly distressed issuers," Chehayeb said.
"For example, we have seen very little progress on asset disposals from Dubai World, which has $4.4bn of restructured debt coming due in only two years."
Even if all planned asset sales go ahead, some Dubai firms will still need fancy footwork to find financing from other sources. The assets of Dubai Group, now in talks on restructuring its debt, are at current market prices worth only about a fifth of its $10bn of debt, sources involved in the talks said.
But the asset sales that have occurred may help prices of Dubai's bonds ride out the turmoil in global markets. The bonds underperformed most of the rest of the Gulf in early June but as markets have partially settled down in the past week, they have rebounded faster.
The yield on JAFZA's $650 million sukuk maturing in 2019 shot up 132 basis points between the end of May and June 27, but it has since dropped back 50 bps to 5.31 percent, and it remains far below the profit rate of 7.0 percent set at issue in June last year.
The yield on the Dubai government's 2020 bond is up 100 bps since end-May, far underperforming top Gulf sovereign credits such as Qatar, but it is outperforming major emerging market sovereigns outside the Gulf such as Turkey, whose 2022 bond yield is up 115 bps.
Raza Agha, chief economist for the Middle East and North Africa at VTB Capital in London, said Dubai should be able to manage its upcoming obligations without too much difficulty.
"That Dubai avoided a fire sale of its assets when the debt crisis hit in 2009 will likely help the emirate realise better value for its investments than would otherwise be the case," Agha said.
"There is also consolidation of assets between Abu Dhabi and Dubai, as highlighted in the recent news on the creation of a merged national aluminium champion. All this, coupled with continued access to global markets at relatively favourable rates, will help Dubai Inc meet upcoming obligations."