Dubai to ask for more time to repay debt

Dubai, Dec. 20: Debt-ridden conglomerate Dubai World is expected on Monday to ask key creditors for more time to pay off its loans, but leave them none the wiser concerning their prospects of being paid back in full.

Saddled with a $22 billion debt pile and in need of restructuring, the Gulf Arab emirate’s flagship company is expected to formalise a request for a payment standstill at a meeting with some 90 creditors at Dubai’s World Trade Centre complex.

Though important, the gathering will probably mark only an intermediate step in a lengthy process, with banking sources anticipating no detailed proposals on the terms of the potential standstill to be discussed.

“Providing clarity is clearly the number one priority,” said Mr Raj Madha, banking analyst at EFG-Hermes. “Obviously a standstill is not ideal. But a standstill with visibility of when payments will be received or the extent of these payments would be sufficient to call it a result.”

Dubai sent shockwaves through global markets on November 25 when it requested a standstill on $26 billion of debts linked to Dubai World and its two property units Nakheel and Limitless.

A $10 billion lifeline from neighbouring Abu Dhabi last week — the third to Dubai this year — helped it stave off default on a $4.1 billion Islamic bond, or sukuk, from Nakheel.

A local newspaper said on Sunday that Dubai may still repay lenders in full, citing unnamed sources.

The National daily said two top Dubai officials, on a confidence-building mission to Britain and the United States in recent days, told financial leaders in London that repaying all bank loans in full “was discussed as a medium-term possibility”.