UAE officials offered assurances that talks on a $24.8 billion Dubai debt deal were going well and that no more major corporate restructurings were expected after Dubai, helping to send financial shares higher.
Central Bank Governor Sultan Nasser al Suweidi said on Monday the country's banks were healthy and well capitalised and that he saw no impact on the UAE economy from the Greek debt crisis.
European leaders and the IMF unveiled a $1 trillion emergency package to prevent contagion spreading from Greece's debt crisis.
Dubai, the second largest member of the UAE federation after Abu Dhabi, is wrestling with a debt burden estimated at $101 billion. Authorities are attempting to restructure nearly $25 billion under the Dubai World holding umbrella.
Concerns persist that other Dubai related entities, specifically Dubai Holding, could struggle with their debt burdens.
Finance ministry Undersecretary Younis al Khouri moved to soothe concerns about the state of the country's financial sector, which faces heavy losses from Dubai related writedowns.
Speaking to reporters, Khouri said: "All the banks are well capitalised."
Markets welcomed a Greek rescue plan and the official UAE reassurances. Dubai's index ended up 1.6 percent in its first gain in four sessions, tracking a global move.
Abu Dhabi banks also rose with National Bank of Abu Dhabi, the UAE's largest lender by market capitalisation, rising 2.53 percent. Rival Abu Dhabi Commercial Bank closed 4.5 percent higher.
The Financial Times on Monday said three companies within Dubai Holding, a state controlled conglomerate like Dubai World, have engaged advisers ahead of a potential plan to restructure billions in debt.
Asked whether there would be any further large scale corporate restructuring in the UAE, Suweidi said: "No, these are the largest."
Analysts said another restructuring would not come as a surprise and Dubai Holding, in particular, would not have the same negative effect as Dubai World's restructuring.
Khuram Maqsood, managing director, Emirates Capital, said: "Dubai Holding issued securities that had longer term maturities coming due in 2013 and 2014."
He added: "The refinancing obligations are farther down the road. The company is doing the right thing in taking steps to better position in advance of its obligations coming due."
In addition, Suweidi said Greece's debt woes will not affect the UAE.
He said: "There's no link between Greece and the GCC countries. Greece is on one continent and the GCC is on another continent. There is no link in terms of financial flows, no strong links, nor strong economic relations."
Separately, the UAE confirmed plans to issue a comprehensive law governing the issuance of public debt and establish a debt management office this year, before considering any issues of sovereign bonds, the minister of state for finance said.
Obaid Humaid Al Tayer, Minister of State, Finance, said: "The first thing is that the law of public debt needs to be issued...after that we will consider the matter of issuing bonds. The law will be passed this year."
Al Tayer said a debt management office will also be set up during the year. Any sovereign issues will take place after the law and office were set up, he added.
The finance ministry's Khouri said a sovereign bond was unlikely this year.
He said: "On the emirates' level we have seen Abu Dhabi issue its own plan (for bonds). As for the federal government, they are not planning (bond issues) in 2010."
Oil rich 'AA' rated Abu Dhabi has been rumoured to be preparing roadshows for new issues on both the sovereign and quasi sovereign level.
The Abu Dhabi government last tapped the markets in April 2009, selling $3 billion worth of debt and its entities placed another $3.8 billion to fund expansion plans, Reuters data show. (Reuters)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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