By Daniel Shane
Bank of America says emirate's repayment to neighbour will 'buoy sentiment'
Dubai could make repayment towards it $20bn loan borrowed from neighbouring emirate Abu Dhabi, according to Bank of America (BoA).
In a report seen by Bloomberg, BoA’s Jean-Michel Saliba said that the payment would serve to “buoy sentiment”, although it may be modest. This followed a series of meetings between BoA and UAE policy makers.
BoA recommended holding Dubai’s high-yielding bonds, such as its 2021 benchmark, Bloomberg reported.
“Our meetings consistently conveyed the sense Dubai has shown its ability to grow again at a respectable 4 percent pace,” Saliba said in the report. “We expect important 2013 maturities to be met.” Last year, three government-linked firms paid or refinanced $3.75bn worth of debt.
The cash was borrowed by Dubai in the wake of the emirate’s financial crisis in 2009.
Dubai’s economy has shown signs of recovery over the last year, following the emirate’s property crash in 2008-2009, which saw prices plunge by as much as 65 percent.
According to Bloomberg data, Dubai’s economy will expand by an average of 4.6 percent between 2012 and 2015.
Earlier this week, a study by Deutsche Bank found that real estate prices and rents rose for the 16th consecutive month in March. Year-to-date growth in property values to March was at 6.2 percent, the report noted.