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Thu 5 Nov 2009 12:33 PM

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Dubai debt 'attractively priced' - Barclays Capital

Company tells clients to buy Dubai bonds, citing emerging signs of recovery, gov't support.

Barclays Capital is telling clients to buy Dubai bonds, citing a high likelihood of support from the federal government, emerging signs of a recovery and the restructuring of government-linked companies.

“We recommend a long position in Dubai sovereign credit,” a team of analysts including Alia Moubayed wrote in a research note dated November 4.

The investment bank said that even after accounting for a possible reduction in the UAE’s reserves and foreign assets held abroad, the ratio of reserves, including estimates of foreign assets held by sovereign wealth fund ADIA, to total UAE external debt exceeds 150 percent.

The bank also noted that UAE president Sheikh Khalifa has stated that the federation will “stand behind any needy emirate, dispelling much of the speculation about an indecisive positioning by the richest emirate”.

It said Dubai’s key economic sectors are showing signs of recovery, with trade and real estate beginning to bottom out, and transport, tourism and retail rebounding.

The number and value of October land transactions rose by 55 percent and 90 percent on a monthly basis, respectively, compared with 8 percent and 16 percent in the first half of the year.

Barclays Capital was also positive on what it called Dubai’s three-pronged strategy to support the economy.This includes increased public spending and the repayment of debt to local contractors; streamlining government-linked companies and focusing on key strategic assets.

“We consider Dubai credit as attractively priced at current levels. Dubai has lagged during the rally and continues to trade wide of the general market,” the bank said.

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Tim H 10 years ago

Dubai bashers, any comments ?

john jones 10 years ago

Is this Barclays the same one that nearly went to the wall itself not so long ago?? Are their predictions to be valued now? Have they learned from their grotesque mistakes? Sad to see that any realistic analysis producing any constructive idea on Dubai's economic position is seen as 'bashing'??

on their toes 10 years ago

Given the presence of Barclays here can we trust their arms length status ? do we really think banks like Barclays are giving a genuine and "not for gain" opinion, people like Tim H must be forming a line to buy the bonds...I bet not.

M 10 years ago

John Jones, did I hear you correctly. You are saying “realistic analysis” …“constructive idea”…I really hope you don’t believe yourself when saying this. Where is the constructive idea in what you said now? Just utter rubbish? Instead of bashing Dubai you criticized Barclays to imply that Dubai debt is nothing more than junk It must be real pain knowing that Dubai is meeting its debt obligations to date and that this bond was oversubscribed by nearly 200%. So you are correct Mr. ‘On their toes” investors where queuing up to buy these bonds at that price. Tim H, don’t bother mate….these guys have nothing to do in life except bashing Dubai in all forums. It’s the same group on AB who try to spin any positive or even neutral piece of information to demoralize Dubai (I can give you the list of names top of mind if you like). I honestly don’t know whether Dubai will demise or flourish and I’m sure no one on these AB blogs knows what will happen. One thing I know for sure, the more I see unconstructive non sense like what these guys are saying, then I know that Dubai is back on the right track!

macca1001@btinternet.com 10 years ago

200% oversubscribed !!! so was palm Jebel Ali......you must be right. Dubai debt is safe, i would buy the bonds myself, its the advice and independence of Barclays that i called in to question not Dubai. Dubai pays its bills, every time !!

jon jones 10 years ago

Not sure where you read that I referred to Dubai debt as junk but you probably lost the thread during your rant......before you throw your shoe at me I was making a comment on Barclays advice having little weight as a general sign either that Dubai or the world economy is moving into 'richer' waters. The question is can and will Abu Dhabi guarantee Dubai finances in the long term, it doesnt really matter to Barclays as they will make huge profits either way whether financing or refinacing debt through their investors. by the time it goes belly up (not that it will) the managers at Barclays will have their bonuses and have moved on......you will then be ranting about a world conspiracy against Dubai by then I can safely assume.....pay your debts and spend what you can afford....

charles 10 years ago

they really have nothing to say that is constructive at all. Tim H goads people into making negative comments either from blind servitude or just plain ignorance. Then M rants at anyone with a different opinion. They are clearly setting each other up for a fall. It is just so sad to see that some people cannot handle different view points to their own.