By Camilla Hall
'They haven’t discussed this issue with us and I don’t think it will be necessary'.
UAE Central Bank Governor Sultan bin Nasser al-Suwaidi said that Dubai isn’t likely to need more central bank aid as one of its companies restructures $26bn in debt.
“They haven’t discussed this issue with us and I don’t think it will be necessary,” al-Suwaidi said today in an interview in Abu Dhabi. His answer came in response to a question on whether Dubai would need further federal support.
Dubai, the second-biggest of the UAE’s seven emirates, and its state-owned companies borrowed money to transform the sheikhdom into a tourism, trade and financial services hub. The central bank, the Abu Dhabi government and two Abu-Dhabi-based banks pledged $20bn to support Dubai’s companies after global credit markets seized.
Dubai World, one of the biggest state-owned holding companies, is in talks to delay $26bn in debt. It will ask banks for permission to delay loan repayments when it presents a plan this month, three bankers familiar with the negotiations said on March 8. The company will present a restructuring proposal to its creditors after its advisers complete valuing the company’s assets, a person close to the Dubai government said on February 17.
“They’re mindful that the restructuring package does not impact the reputation of the emirate,” al-Suwaidi said. “All banks will be treated equally and in a fair way. There will be no discrimination between local or international banks.”
The central bank is taking an advisory role in the talks, he said. It is not part of the committee charged with the restructuring.
The International Monetary Fund estimates Dubai borrowed $109.3bn, about 130 percent of the emirate’s gross domestic product, during a real-estate boom that ended in 2008.
“Once the restructuring is put in front of banks I think they will have their own decisions whether to accept or not,” he said. “It’s best to make it attractive and acceptable to banks,” he said. The proposal will be discussed with banks “very soon,” he said. (Bloomberg)