Dubai and its state-owned non-financial companies have outstanding debt of $101.5bn and may need further financial support to meet these obligations, Moody’s Investors Service said.
Although “significant progress” has been made by the government and state-owned companies to tackle maturing debt, the rating company said in a report today that it remains concerned about the emirate’s maturing debt.
“Moody’s has seen very few real signs of material and voluntary deleveraging,” said David Staples, managing director for GCC Corporate ratings at Moody’s. “This raises concerns about renewed medium-term pressures when the refinanced obligations become due, as well as Dubai’s potential renewed need for further financial support.”
Dubai, the Gulf’s trade and tourism hub, was on the brink of a default in 2009 and is recovering after a $20bn cash injection from the UAE central bank, the Abu Dhabi government and its banks. State-controlled companies including Dubai Holding and Drydocks World are still in talks with lenders to restructure debt, while Dubai World reached an agreement with creditors on about $25bn of debt in March.
The government has about $27.9bn of direct debt, of which $18.45bn was raised to capitalize the Dubai Financial Support Fund, Moody’s said. State-owned companies have approximately $68.6bn in outstanding debt, excluding government guarantees, it said.
About $13.8bn in bank and bond debt is due to mature between the fourth quarter of 2011 and the end of 2012, with a further $11.2bn being restructured.
State-owned companies such as Dubai Holding Commercial Operations Group, Jebel Ali Free Zone and DIFC Investments, which have $3.8bn worth of debt maturing next year, are all facing refinancing risks and may experience “ratings volatility” as they move closer to the maturity dates, Moody’s said.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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