Sheikh Mohammed expresses concern about debt crisis in some European countries
Dubai has overcome the financial crisis that forced it to delay debt payments two years ago, its ruler said.
“Dubai is well,” Sheikh Mohammed Bin Rashid Al Maktoum said on Friday at the opening ceremony for the emirate’s second Metro line. He also said he was concerned about the debt crisis in some European countries.
The second-biggest of seven sheikhdoms that make up the United Arab Emirates, Dubai has seen its credit risk fall since the start of the year even as political turmoil pushed rates higher in neighbouring Saudi Arabia and Bahrain. Unlike the two, Dubai didn’t experience anti-government protests.
Dubai’s credit risk has dropped in the past two years as debt-restructuring deals, bond repayments and profitability at companies boost confidence in the emirate’s economic rebound.
The cost of insuring Dubai government debt against default for five years was at 404 basis points today, down from 415 at the end of 2010, according to data provider CMA. The company is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Dubai, the Middle East’s tourism and trade hub, suffered after the onset of the global crisis in 2008 as property prices crashed and credit markets froze. Tourism, trade and transport are recovering after a $20bn bailout in 2009 from the UAE’s central bank and neighboring Abu Dhabi to repay part of its debt. Dubai and its state-owned companies borrowed about $113bn, according to an International Monetary Fund report in June.
The Dubai government raised $500m from the sale of 10-year bonds with a five-year put option in June at a yield of 3.75 percent over the five-year mid-swap rate, or 5.59 percent. The yield on the notes advanced 2 basis points, or 0.02 percentage point, to 5.65 percent at 6:34 pm in Dubai.
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Well, I think what Sheikh Mohammed means - this is the dawn of a new era of New Dubai - sure & steady instead of the Old Dubai which was FASTIDIOUS.
Public confidence can bring more value to the market than bonds. Mainly, banks and developers drag this city behind from moving forward by their statements and policies.