Showing posts with label Dubai World. Show all posts
Showing posts with label Dubai World. Show all posts

Thursday, 1 July 2010

Nakheel Dubai starts Payment to Creditors

source businessweek

Nakheel PJSC began making payments to its biggest contractors as the Dubai World-owned property company seeks to alter terms on $10.5 billion of unpaid bills and loans amid falling property prices in the emirate.

Nakheel started making 40 percent cash payment to trade creditors, according to a company statement today. “The announcement marks significant progress in our recapitalization plan following on from the initial payments to trade creditors of 500,000 dirhams or less which commenced in March.”

Nakheel, the builder of palm-shaped islands off Dubai’s coast, said in March that trade creditors would be offered 100 percent recovery of their claims -- 40 percent through a cash payment and 60 percent through a publicly tradable Islamic bond, paying 10 percent return annually. The Dubai government in March pledged to pump $8 billion into Nakheel and said it will take over its ownership from Dubai World after the restructuring. ....continue reading

Saturday, 22 May 2010

Dubai Debt Agreement - Nakheel faces cancelled projects

original source Bloomberg Businessweek by Zainab Fattah and Anthony DiPaola

Dubai May 21 (Bloomberg) -- Nakheel PJSC, the Dubai World construction unit that received state cash to pay contractors and suppliers, may face an even greater challenge in deciding which of its planned projects to cancel.

In March, the company said it was evaluating its portfolio to identify “essential projects.” Nakheel will decide what buildings will be completed at the end of the restructuring process, a spokeswoman who declined to be named said by telephone yesterday.

Nakheel, the builder of palm-shaped islands off Dubai’s coast, is restructuring $10.5 billion of debt and has asked trade creditors to wait five years to receive full payment after falling behind on its bills. The Dubai government in March pledged to pump $8 billion in cash into Nakheel to help it pay contractors and suppliers and complete developments. Its unrealized plans include residential islands shaped like a world map and a coastal development that would be twice the size of Hong Kong Island.

http://www.businessweek.com/news/2010-05-21/nakheel-faces-canceled-projects-after-debt-agreement-update1-.html“They have to finish the projects they started and probably the working capital support has already come from the government,” Saud Masud, a Dubai-based analyst at UBS AG, said of Nakheel’s development plans. “I’d be surprised if they didn’t postpone most of the large projects that haven’t started or downscale them significantly.”

If Nakheel’s capitalization plan is approved, it would lead to a “prompt completion” of projects that are close to being finished off, according to the developer’s website.

Dubai World, the state-owned holding company that includes Nakheel among its construction, hotel and shipping assets, yesterday reached an agreement with its main creditor group to restructure $23.5 billion of liabilities. The agreement includes extending repayment dates and converting loans into equity.
continue reading

read also from the Wall Street Journal: Dubai World Debt Deal sets example for dubai,Greece-Banker

Saturday, 17 April 2010

Creditors reject Dubai World 1 % interest offer

original source Arabian Business

Sources told Reuters that Dubai World's 1 percent rate offer on the new debt
was rejected by creditors, who countered the offer with one at market
rate, which they estimated to be around 5 percent.
continue reading

Sunday, 20 December 2009

Dubai World is expected to make a formal request for debt standstill

source Kippreport

Dubai World, a government-owned conglomerate, is expected to make a formal request for a debt standstill on $26 billion at a creditor’s meeting on Monday, reports Reuters. Bankers tell the news agency it could take over a month for the request to be approved.

“You can’t bet on it, because anything could happen; it could be anything from a complete write-off to 100 percent recovery,” a senior banker said.

The meeting is schedule for 12.30pm on Monday at the conglomerate’s headquarters.

“We’re going to pitch up, hear what they say, give our views, wait for the formal extension request and work on a restructuring,” a Dubai-based banker close to the talks said.

Read also from Reuters " Scenarios - Creditors likley to agree Dubai World standstill "







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Sunday, 13 December 2009

D-day for Nakheel Dubai - December 28 is the final cut off point

original published by Reuters

DUBAI (Reuters) - Heavy rain pounded Dubai on Sunday adding to the gloom of the emirate's debt woes a day before the deadline of the $3.52 billion bond by state-owned developer Nakheel, with no word on how it will be handled.

Dubai's stock market did soar for a second consecutive session on Sunday as traders reacted to a surge in Nakheel's bond price last week on mounting speculation it will repay.

The Islamic bonds, or sukuk, had been trading around 110 cents to the dollar before the government shocked investors on November 25 with a request for a six-month standstill on the debt of state-linked Dubai World.

The announcement sent the sukuk down to mid-40 lows, but closed on Friday at about 54 cents to the dollar.

Fund managers and bankers regard Monday's outcome as the litmus test for Dubai World's planned $26 billion restructuring and Dubai as a whole for resolving its debt burden.

But the odds of Nakheel, the developer of palm-shaped islands, repaying are low.

"It's very hopeful people (speculating)," says a Dubai-based fund manager. "It seems very strange that if Dubai World intended to pay they would have gone through the last two weeks of pain."

A sudden u-turn and repayment would placate disappointed and confused investors in the immediate term. Dubai's handling of the situation has tarnished its reputation.

Dubai's finance chief on Thursday tried to reassure investors saying its actions were more important than its public image. But, Dubai World has few options.

"The key thing is the lack of clarity," said Nish Popat, ING's head of fixed income in the Middle East. "What's needed more than anything else is some sort of information to understand what the plans are going forward and how they are progressing."

Reflecting rising repayment hopes, five-year credit default swaps for Dubai fell more than 30 basis points on Friday to 533 basis points, according to CDS monitor CMA DataVision, compared with a peak of almost 700 bps at the end of November.

The level is still high given the CDS was quoted at about 300 bps before the November 25 announcement.

"The CDS spreads are better, and news of a hedge fund buying into Nakheel - this is all positive ... even if you buy Nakheel at 50, and they pay out 70, you're still making good money," said a banker from a Dubai government-controlled lender.

If Nakheel does not pay on Monday, it would technically be in default, but it would still give its restructuring team a two-week grace period to reach an agreement with creditors.

December 28 is the final cut off point. After that a cross default clause in its original prospectus will be triggered that covers Nakheel and its guarantor Dubai World, adding to the overall debt burden.

Regional markets have been struggling for weeks under the issue.

"Prices are so distorted right now," said Haissam Arabi chief executive at Gulfmena Alternative Investments. "Tomorrow is a big day, until we get some clarity (about Dubai's debt) there will be no real trend. The main catalyst we are waiting for is Nakheel news."

STRIKING A DEAL

Analysts have speculated Nakheel could repay its bond at 70 cents to a dollar and issue new debt for the remainder.

"Such an outcome would be beneficial for both parties involved," EFG Hermes analyst Fahd Iqbal

Thursday, 10 December 2009

Dubai Schulden Albtraum-Szenario - Dubai World - Nakheel - Dewa

original source Handelsblatt Germany

"Viele Kreditverträge haben eine Klausel über reziproken Verzug: Wenn ein Gläubiger in einem Fall zahlungsunfähig wird, kann er bei all seinen anderen Kredit-Verpflichtungen ebenfalls in die Zahlungsunfähigkeit abrutschen", sagte Jawad Ali von der Anwaltskanzlei King & Spalding. Im Klartext: Sollte Nakheel seine Außenstände nicht begleichen, muss die Mutter Dubai World einkalkulieren, dass alle Gläubiger plötzlich ihre Ansprüche geltend machen.

Die Details hingen von der Formulierung des jeweiligen Vertrags ab. "Das ist ein Albtraum-Szenario, das Dubai World mit dem Schulden-Moratorium verhindern möchte", so Ali.

read the full article Auf Dubai rollt nächste Schuldenlawine zu (bei Handelsblatt.com am 10.12.2009 veröffentlicht)



Friday, 4 December 2009

Dubai Holding seen at risk

original source Zawya / Financial TimesThursday, Dec 03, 2009
Thursday, Dec 03, 2009

Thursday, Dec 03, 2009

With Dubai World cut adrift from implicit government support, there are concerns about potential defaults by other state-related entities. The name mentioned most by bankers and investors in the region is that of Dubai Holding, the personal investment vehicle of the ruler, Sheikh Mohammed bin Rashid al-Maktoum.

"Dubai's actions have introduced the risk that restructuring of other corporates could follow," Barclays Capital said in a report this week. "We would focus on those with weak fundamentals and upcoming maturities and we view Dubai Holding as being most at risk."

Dubai Holding's Commercial Operations Group's debt was yesterday downgraded to below investment grade by Standard & Poor's, the ratings agency, along with four other government related companies. The cost of insuring $10m (€6.7m, £6m) for five years against default ballooned to $1.1435m a year on Tuesday, making it the riskiest Dubai corporate bond according to the market.

A Dubai Holding spokesman yesterday said: "I am very doubtful that we will face any problems paying the debt. Dubai Holding is confident that it is on track with all payments."

Formed in 2004, its investment arms led the emirate's international buying spree to recycle funds generated by developing swaths of Dubai desert. The group leveraged profits to build debts of $10bn, with maturities in 2010 of $2bn, according to Barclays Capital.

Bankers say because of its connection to the ruler the conglomerate enjoys stronger political standing than Dubai World

It appears to have a stronger financial position. Analysts say it has a greater ability to service its debts thanks to a number of cash-generating businesses. It is believed to have received cash injections from the government in recent months. The company has never confirmed this.

Still, bankers say its investment arms, Dubai International Capital and Dubai Group could face more financial problems than its commercial wing, which spans hospitality, business parks and real estate. "Dubai Holding is not going to acknowledge problems right now. But there is a contagion effect in every Dubai entity , this is just the beginning," a senior banker said.

Dubai International Capital is believed to be looking to sell assets but has enough money ringfenced by the holding company to keep afloat its buy-out businesses in Europe and the Middle East, according to those familiar with the company. These people say its public equities portfolio, which includes stakes in EADS, Sony and ICICI Bank in India, may be sold. DIC is also winding down its emerging markets private equity unit, Middle East venture capital portfolio and interests in other private equity funds.

Dubai HoldingDubai 's commercial arm includes profitable businesses, such as flagship hotels company Jumeirah Group. The group has slimmed down faster than the troubled Dubai World conglomerate. DICand Dubai Group, for example, have merged their back-office operations and Dubai Holdings' developers have merged and been folded into Dubai 's leading developer, Emaar Properties, much to the alarm of minority shareholders who fear dilution and say they are being forced to bail out other companies.

The restructuring already under way at Dubai Holding is so deep that analysts are raising the possibility that, like Dubai World
, it could be broken up and its best businesses - notably Jumeirah - moved into other parts of Dubai Inc., such as Investment Corporation of Dubai , which is emerging as the emirate's "good bank" of assets.




Thursday, 3 December 2009

Nakheel and its parent will be a test case for Dubai

original source Business Standard

Dubai World’s guarantee to bondholders could prove worthless. The emirate’s holding company, which is seeking a six-month standstill from creditors, pledged to repay a $3.5 billion Islamic bond issued by its now troubled property subsidiary Nakheel. Yet with local creditors effectively calling the shots, foreign lenders might find enforcing that guarantee impossible.

Nakheel has asked for trading in all three of its listed Islamic bonds to be suspended. Only the first, which was issued in 2006 and is due to mature December 14, was guaranteed by parent Dubai World. The liability on the subsequent two bonds, which have a total face value of $1.7 billion and mature in 2010 and 2011, appears to be limited to Nakheel itself.

The Dubai property developer’s 2008 accounts show $41.5 billion of assets and $17.5 billion of liabilities — a net asset value of $24 billion. But real estate prices in the emirate have fallen around 50 per cent in 2009.

That means Nakheel, which funded some of the emirate’s most outlandish projects, could easily now have a negative equity value of $5.5 billion.

The equity value at parent Dubai World, which had liabilities of $59 billion at the end of 2008, is also likely to be negative. Its portfolio of 10 companies looks mostly troubled. However, Dubai World does hold 77 per cent of publicly-listed ports operator DP World. That was worth $5.1 billion on November 25, just before Dubai World announced its intention to restructure.

Nakheel’s foreign creditors shouldn’t get excited about their recovery prospects.

To get a lawsuit against Dubai World off the ground, 75 per cent of Nakheel’s bondholders have to agree. But the majority of creditors are local banks, which are likely to accede to any request to roll over Nakheel’s debt — even if the capital structure remains unsustainable, according to one ratings analyst. And even if local lenders joined in, Dubai’s law might not support a claim that forced the sale of the assets of government-related entities.

Lawyers agree the restructuring of Nakheel and its parent will be a test case. That makes Dubai World’s guarantee look less than solid.









Wednesday, 2 December 2009

Dubai is down, but fighting for its place in the sun

original source Wall Street Journal

Dubai 2 December 2009

Finally, a chink of light. Dubai World has belatedly provided some of details on its planned debt restructuring.

But for investors the situation still resembles a darkened room, where the outlines of the furniture are now visible but little else. And for Dubai itself, there is more than just the future of $26 billion of debt at stake. The emirate's credibility as a financial center and its ability to continue financing good businesses, such as ports operator DP World, will hinge on its handling of the crisis.

Tuesday brought some good news. The $26 billion of debt affected is less than the $60 billion feared last week. Even so, questions linger. The restructuring process will include Dubai World itself and property developers Nakheel World and Limitless World. Analysts at Barclays Capital have identified $8.5 billion of debt at Nakheel, $5.5 billion at Dubai World and $1.2 billion at Limitless. That still leaves $10 billion unaccounted for. It may be in bilateral bank loans where there is no public disclosure. But it still leaves creditors unsure of their position.

It is also encouraging that Dubai World intends to adopt a policy of regular communication, though again the process lacks detail. For example, it is unclear whether the six-month standstill requested from creditors is voluntary or enforced. Given the looming Nakheel maturity -- just two weeks away -- it will be a challenge to secure creditor agreement in advance. If some lenders reject a stand-still it could trigger another bout of uncertainty and bondholders are organizing themselves for battle: a group holding 25% of the Nakheel bonds has hired Ashurst as a legal adviser.

Dubai's strategy relies on ringfencing certain key businesses from the general restructuring -- possible because of the lack of cross guarantees in the Dubai World group. For example, Ports & Free Zone World, which includes port operator DP World and P&O Ferries, is now clearly excluded from the process. But the initial lack of clarity on this issue has already cost Dubai Inc. a swathe of ratings downgrades. Of Moody's six ratings on Dubai companies, four are now junk.

The history of debt restructurings suggests that investors will not be scared off Dubai forever. Russia, for example, returned as an oil-fuelled darling of international investors even after its sovereign default in 1998 and amid continuing corporate governance and transparency problems.

If Dubai handles the painful process sensibly, it will emerge chastened from the experience, but not necessarily a spent force. The infrastructure built during the bubble will not vanish. The emirate now has to prove its status as one of the most western-friendly places to do business in a region still attractive for its massive oil wealth. If it can do so, Dubai will be down, not out.

Write to Richard Barley at richard.barley@dowjones.com




Monday, 30 November 2009

Gambles Dubai with its financial reputation ?

original source Zawya

When you start building a third island shaped like a palm tree, intending it to be as big and crowded as Manhattan, you are crying out for a sober voice to bark: "Stop!"

But when that island is just one atoll in an artificial archipelago that would reconfigure the Persian Gulf coast into a thicket of trees, a map of the world, a whirling galaxy, a scythe and a sun that looks like a spider, what you need is some corporate restructuring. That, we learnt on Wednesday, was exactly what holding company Dubai World, the parent of Dubai's chief coastal developer Nakheel, would get.

Last year, Robert Lee, one of Nakheel's executives, showed me a map of the future Dubai Waterfront as his company put the finishing touches on the more modest Palm Jumeirah, the skyscraper- and villa-crammed island that started the trend.
"That's crazy!" I said.  "Bold," countered Mr Lee.
Bold is probably not the word that the number-crunchers at Deloitte are muttering as they pore over the company's books.

The Dubai government's decision to postpone repayments on $3.5bn in Dubai World debts - seen by investors as the litmus test of the emirate's creditworthiness - is the clearest sign yet of the dire state of its economy. Dubai's fanciful island reclamation, a doubtful investment in an era of rising sea levels, was just one of the gambits that ushered this tiny emirate into the world's consciousness.

Thankfully, many of these ideas wound up on the scrapheap. There is the cancelled Snowdome (although the city's indoor ski slope lives on), part of a gargantuan amusement district that was to be larger than the city of Orlando it intended to rival. Also scrubbed is the $11bn Arabian Canal, a 75km moat that would have ringed the city. Enough of these sorts of schemes were built to make Dubai and the United Arab Emirates the holder of the world's largest percapita environmental footprint.

Until Wednesday, investors were largely content to give Dubai the benefit of the doubt, given that ruler Sheikh Mohammed bin Rashid al-Maktoum had assured the world that his emirate was good for its debts.
In a region where a man's word already carries outsized weight, the blunt-spoken sheikh's charisma had been built on the credibility of his pronouncements. It must be painful indeed for him to be seen as backtracking.

Sheikh Mohammed, whose family has run the emirate with astonishing stability since 1833, faces an acute test of his leadership and the clearest threat yet to his dreams for the city.
The ambitious sheikh wants Dubai to become the financial centre for a quarter of the globe, the under-served and fast-growing markets between Singapore and Frankfurt.

Wednesday's announcement makes that goal less likely, damaging Dubai's reputation among the investors and financiers it has worked so assiduously to court. "Naturally they are not amused," says Eckart Woertz, chief economist at the Dubai-based Gulf Research Centre. "It will be a case of once bitten, twice shy should Dubai try to tap international markets again."

In the longer term, the news could make Dubai's rivals more attractive, persuading international companies to decamp to, say, Doha or Abu Dhabi. Unlike Dubai, those cities have sound, energy-based economies.
But for now they do not offer the same level of western lifestyle, nor can they match Dubai's services in shipping, logistics, banking and air travel.

The emirate's inability to repay also casts a shadow on the Maktoum family's vital relations with its cousins who rule Abu Dhabi, the al-Nahyans, who seem to be letting their poorer kin sweat it out in public.
One wondered what price Abu Dhabi might demand for a full bail-out.

One plausible option was a tighter union among the seven UAE states, with maverick Dubai forced to trim its embarrassing ties with Iran and Israel. Dubai might also have been asked to merge its independent customs service into the federal bureaucracy.
Sheikh Mohammed may be calculating that Dubai's foreign policy freedom is more valuable than its financial reputation.
There is logic in this.

The bankers in London and New York have been important in nurturing Dubai's growth.

But the emirate's ties with the region - Karachi, Mumbai, Riyadh and Tehran - are those that will make or break this city.

The writer is the author of City of Gold: Dubai and the Dream of Capitalism
By Jim Krane







Dubai debt tops global headlines


Dubai property market set to see further price falls
 
Arabian Business 29 November 2009 

Dubai's property market is likely to face further price falls and increased concerns over the availability of finance after the emirate said it would delay debt payment issued by two of its flagship firms, analysts said.
... read the full article

Dubai World refuses assets sale - paper

Dubai World has refused to offload assets at fire-sale prices to repay obligations, forcing it to seek a debt standstill, a newspaper report on Sunday quoted an unnamed source at the government-controlled firm as saying.   read the full article..

The National

Central Bank to back country`s lenders

The UAE Central Bank has pledged support for lenders in the UAE and made emergency funds available to avert any liquidity shortage that might occur as a result of the proposed restructuring of Dubai World.

Banks in Abu Dhabi and Dubai are expected to disclose their exposure to Dubai World’s estimated US$24.27 billion (Dh89.14bn) bonds and bank debt amid a global search for creditors.    read the full story

Reuters

UAE moves to counter Dubai fallout but markets wary

DUBAI (Reuters) - The United Arab Emirates offered banks emergency support on Sunday, the first steps to ease fears that a looming debt default by two of Dubai's flagship firms could derail the global economic recovery.

But the move to inject liquidity into Dubai's banks by the central bank of the Gulf Arab state, together with promises by neighboring city-state Abu Dhabi to provide selective support to Dubai companies was seen as by analysts as the bare minimum.

Dubai markets, which are set to open on Monday morning after a four-day holiday, are expected to fall by the maximum daily limit of 10 percent as banks, property and construction firms face investor ire over moves to restructure the Dubai economy.
more...

WallStreetJournal
The panic over Dubai`s debt problem tells us more about investors than it does about the emirate.
full story......





















Sunday, 29 November 2009

Dubai Financial Crisis - Actual News Dubai Debt Problems

Telegraph UK 29 November 2009

Abu Dhabi will not race to Dubai`s rescue

Sheikh Mohammed of Dubai is under mounting pressure to explain the emirate’s debt problems, after Abu Dhabi indicated that it will not write a blank cheque to bail out its neighbour.
read more

From Bloomberg 29. November 2009
Samsung C & T stops Dubai Bridge Work as Nakheel halts payments

Wall Street Journal 29.November 2009
DUBAI (Zawya Dow Jones)--Debt-laden Dubai World's unit Jebel Ali Free Zone Authority, or Jafza, faces on Monday a coupon payment on a 7.5 billion U.A.E dirham ($2.04 billion) Islamic bond in the first key test of whether it will default.

The Islamic bond, or sukuk, was issued in November 2007 through a Cayman Islands-registered company called JAFZ Sukuk Limited and pays 130 basis points over the six-month Emirates Interbank Offered Rate, according to Zawya.com.

The coming coupon payment is estimated to be between AED125 million and AED135 million, according to analyst calculations.

Spokespersons for Dubai World declined to comment on the payment Saturday, a holiday in the U.A.E. The Jafza sukuk is the first payment due for a Dubai government-related entity since the restructuring announcement Wednesday, which sent global markets and banks into a panic before the weekend.

Dubai World's request for a standstill will include a key $3.52 billion bond owned by Nakheel, the developer behind Dubai's palm-shaped islands, that matures on Dec. 14.

Payments on the sukuk are made semi-annually, on May 27 and Nov. 27. Bankers said that payment is due on Monday, since Nov. 27 fell on a weekend in the U.A.E.

Barclays Capital, Deutsche Bank, Dubai Islamic Bank, and Lehman Brothers acted as joint lead managers and joint bookrunners, according to the bond prospectus. The sukuk is due November 2012.

Jafza operates a free trade zone and industrial parks in the port town of Jebel Ali, outside of the city of Dubai, and is a unit of Economic Zones World, or EZW. EZW is operated by Dubai World.

S&P and Moody's downgraded Jafza and other Dubai government related-entities Wednesday, after Dubai World said it would restructure and ask for a standstill on all debts until at least May 2010. S&P placed Jafza on creditwatch with negative implications. Moody's downgraded its issuer and debt ratings to Ba1 from Baa1.

Seoul officials meet to cope with Dubai debt crisis 29. November 2009
South Korea's financial authorities were to convene a meeting later on Sunday to gauge the fallout from the Dubai debt crisis and discuss countermeasures to stave off any possible impact on the nation's financial markets, officials said...... read more

Telegraph UK 29. November 2009

Tim Clark, president of Emirates Group, has said the Dubai business community is "shocked" by the financial crisis.
read more...


Telegraph UK 29. November 2009

Dubai an Emirate in crisis

.....Dubai is in trouble. We already knew that, long before the announcement last week that it wanted to delay payments on billions of dollars of debts owed by its Dubai World (DW) state holding company. But the trouble caused by a collapse in the property market put the city on a par with other states around the globe. This announcement was of a different order. It damaged the credibility of the city's government and, by extension, the United Arab Emirates (UAE) as a whole. ....
read more


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Saturday, 28 November 2009

Secenario - Why Dubai`s Debt Matters

original source Forbes from Oxford Analytica

If Abu Dhabi doesn't mount a serious rescue operation, creditors are likely to seek legal redress against the defaulting Dubai government.

Dubai's heavily foreign investment-dependent economy began to unravel in September 2008 following the global credit crunch. Property prices fell steeply, share prices in publicly listed companies collapsed and confidence was badly shaken in the emirate's ability to survive the crunch. By the close of 2008, government-backed companies responsible for Dubai's development had accrued debts of more than 80 billion dollars.

Abu Dhabi bailout.
In February this year, following Dubai's difficulty in refinancing a $3.8 billion loan, the United Arab Emirates (UAE) Central Bank, backed by Abu Dhabi, subscribed to a $10 billion bond, with interest rates set at 4%. However, earlier this month, it became apparent that Dubai would need a much bigger capital injection, especially given that its largest property developer--Nakheel, a subsidiary of Dubai World--was due to refinance a $3.5 billion Islamic sukuk bond on December 14.
Article Controls
On November 24, it was announced that Abu Dhabi had provided an additional $5 billion loan:

--Significantly, insiders indicated that this loan came with strings attached, and that it was to be used to pay disgruntled foreign contractors rather than to re-finance the Nakheel debt.

--While little is known about Abu Dhabi's reasons for these limits on its assistance, it may have been reluctant to be associated with Nakheel, a company with problems considered to be too big to solve through loans.

Sovereign default ?

Although not technically an example of a sovereign default, the request has been viewed as such. The agencies have thus downgraded most government-backed Dubai companies and entities either to below investment grade or to junk status.

The credit default swap rate on Dubai debts rose by more than 100 basis points, taking it to 434 points.
As a result, the emirate's ability to seek additional credit on international markets has been sharply curtailed.

Political collapse ?

If Abu Dhabi does not mount a serious rescue operation, creditors are likely to seek legal redress against the defaulting Dubai government:
--In this scenario, 'Dubai Inc.' will be widely regarded as bankrupt and the ruling Al-Maktoum family held responsible, due to the 'blurred lines' between the government and the wealth of the ruling family.
--There would also be political ramifications. It would be unfeasible for Sheikh Mohammed or Sheikh Hamdan to remain in power following such a massive loss of prestige.

If, on the other hand, Abu Dhabi does agree to provide more credit, there will also be significant implications:
--It will do so only under very strict conditions, since it will be reluctant to pour money into rescuing failed projects.
--It will thus begin to dictate terms to Dubai, and almost certainly seek to centralize power in the UAE federation and rein in Dubai's autonomy.
--However, given the political culture of the Gulf states, such moves are likely to be made discretely, in order to allow the Dubai ruling family to save some face.

Outlook.
Dubai World's decision to delay paying its creditors is a serious miscalculation, since, by trying to restructure some of its largest debts, it has placed itself under close international scrutiny. This will make it extremely difficult for the company to acquire fresh credit, and increase the risks of further defaults. Only oil-rich Abu Dhabi is in a position to stage a financial rescue, but even if it does, Dubai is likely to emerge chastened, and to adopt a different approach towards economic development.

To read an extended version of this article, log on to Oxford Analytica's Web site.
Oxford Analytica is an independent strategic-consulting firm drawing on a network of more than 1,000 scholar experts at Oxford and other leading universities and research institutions around the world.
For more information, please visit Oxford Analytica here













Thursday, 26 November 2009

Shocking - Dubai`s main investment fund seeks debt payment delay

original source BBC

The government-owned investment company behind Dubai's rapid development drive has asked its creditors for a six-month delay on repaying its debts.

Dubai World, which has total debts of $59bn (£35bn), is asking creditors if it can postpone its forthcoming payments until May next year.

Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring.

The company has been hit hard by the global credit crunch and recession.

'Shocking'

The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.

"It's shocking because for the past few months the news coming out has given investors comfort that Dubai would most probably be able to meet its debt obligations," said analyst Shakeel Sarwar, of SICO Investment Bank.

Dubai is one of the seven self-governing emirates or states that make up the United Arab Emirates.

Analysts say the Dubai government has paid the price for a flamboyant economic model centred on foreign capital and giant construction projects.

Some have speculated it is likely to turn to the more economically conservative Abu Dhabi emirate to bail it out.

The Dubai World announcement was made on the eve of the Eid al-Adha Muslim festival, which will see many government agencies and companies close in Dubai until 6 December.

see also: Bloomberg Reuters WallStreetJournal






Friday, 6 November 2009

Dubai Prosecutors will hunt former senior executive of Istithmar World

Dubai, 05 November 2009
An Interpol Red Notice could be issued for the arrest and possible extradition of Chris Turner, who was sentenced in absentia to five years in jail for embezzling AED4.9 million ($1.3m), UAE daily The National reported on Thursday.

The former risk assessment manager for the investment arm of Dubai World was also ordered by Dubai Criminal Court to pay $2.7m in fines and restitution.

Turner, speaking to newswire Zawya Dow Jones from a location outside the UAE, said: "I'm innocent of the charges and I'm not in the country. I'm reviewing my legal options."

"This is a matter for the appropriate authorities," said a spokesman at Istithmar World in an emailed statement to the newswire.

But prosecutors in the UAE said they would hunt for him.

source Arabian Business here read the full article



Tuesday, 3 November 2009

Shareholders' equity of the top 150 Arab banks is just 170 billion dollars - Gulf Banks cannot finance huge projects alone

source Zawya

Nov 02, 2009 (AFP) - Gulf and Arab banks are unable to finance huge projects in the oil-rich Gulf region and fill a credit gap created by the withdrawal of foreign banks amid the global financial crisis, bankers said on Monday.

"The total shareholders' equity of the top 150 Arab banks is just 170 billion dollars," Shaikha al-Bahar, deputy chief executive of National Bank of Kuwait, told the Kuwait Financial Forum.

"These banks are not capable of financing huge projects. We have limitations," said Bahar, adding that the cost of projects in Gulf states over the next several years is estimated at more than 2.1 trillion dollars.

The global financial crisis has resulted in a major credit squeeze, forcing many countries in the region to cancel or postpone hundreds of projects for a lack of finance that was mainly provided by international banks.

The cost of lending also became expensive, thus raising the cost of projects.

Jean-Christophe Durand, BNP Paribas managing director in the Gulf, said good projects will still be able to attract capital at the right price.

"(But) we still need international banks," for financing of major projects in the Gulf, he said.

Abdulaziz al-Ghurair, chief executive of Mashreq Bank in the United Arab Emirates, said Gulf banks can fill part of the credit gap with some help.

"Gulf banks can fill the (credit) gap created by foreign banks... provided risk is distributed at all Gulf states and with help from other sources," he said.

Speakers said cash-abundant Gulf governments are required to play a key role in financing mega projects, while others said local investment companies should also contribute.

Banks in the Gulf have been strongly affected by the credit crunch and many were exposed to bad debt, resulting mainly from a slide in the value of assets and problems at investment firms and family companies.

All central banks in the region have asked banks to allocate provisions against bad loans, a process that impacted profits of Gulf lenders.

Former Kuwaiti finance minister Mahmud al-Nuri said he believes Gulf banks will not be able to face the post-crisis conditions without key mergers.

"I believe that over the next five years, there should be three to four regional bank mergers. This is very necessary," he said.

Ghurair said there has been no strategic plan for bank mergers in Arab countries and the few mergers that took place were among distressed banks. "I hope there will be some strategic mergers in the next decade."

Wednesday, 26 August 2009

Dubai - Herve Jaubert - The Spy who came from the sea

source The National

If Hervé Jaubert is to be believed, the one thing he learnt well during 15 years spying for France’s intelligence service was how to disappear.







So in May 2008, facing accusations in Dubai of fraud and embezzlement worth Dh14 million (US$3.8m), this country’s most wanted Frenchman appears to have done just that. He vanished.

He tells a tale befitting a spy thriller, much of it difficult to confirm as fact, but no less fantastic for a man convicted in absentia for embezzlement, and named in a separate case in France.

It was on a Friday morning during dhuhr prayers, under a scorching sun in Fujairah, that the former submarine builder for Dubai World claims he boarded a rubber dinghy. He charted a six-hour route to a French accomplice on a waiting sailboat, and then fled to India.

For the nearest patrol craft, 5km away, giving chase would have been impossible, according to Jaubert – even if his dinghy had been sighted. A master scuba diver, he said he had swum underwater for more than an hour to disable the fuel line to the boat previous night.

In the days before he executed the plan, he claims, he scoped the country’s borders using Google Maps for a perfect escape route, then surveyed the area on the ground. To elude the authorities, he said, he used aliases to book hotels and even to buy a sail boat. He disguised himself as a bespectacled tourist, a bearded Emirati man in a dishdasha and even, he says, as a local woman by wearing a padded abaya misted with Arabic perfume.

“When you wear an abaya, you become a ghost. Nobody talks to you. Nobody looks at you. Not even a police officer would talk to you.”

Jaubert is not shy about the fact he is trying to profit from this story. His book, Escape from Dubai, will be released in October.

But to UAE authorities, he is nothing more than a swindler.

On April 15, Jaubert was tried in absentia and convicted of illegally acquiring Dh14.12m by abusing his position with Exomos, a subsidiary of Dubai World, according to court records. He was sentenced to five years in prison but denies the charges against him.

He also denies being the Hervé Jaubert who, according to a Canadian Broadcasting Corporation report, was sentenced to two years in prison in France for a 1994 plot to intimidate a company official over a water supply deal.

“I know the story but it’s a business story; it’s my name so it sounds like me but I was not an army captain. I had nothing to do with these people, it’s a fabricated story. I can e-mail you a certificate from the French ministry of justice showing that I have no criminal record.”

In the UAE case, two witnesses, an Egyptian and an American, both directly linked to the investigation, testified in writing against Jaubert.

The first, a financial investor, told the court: “Jaubert used Exomos bank accounts to pay off lawyers in the United States. In addition, he expensed Exomos shipping his car and his wife’s car.”

The witness added that Jaubert used Exomos bank accounts, “to purchase items from his company in the US, Seahorse Submarines, many of which did not arrive at all”.

The total was worth Dh11.86m according to the witness.

Court records also show Jaubert charged Exomos Dh1.8m for two submarines “which were never delivered”. The witness claims Jaubert gave himself a commission exceeding Dh2m.

The second witness, an American, said: “Two submarines were purchased from him. The first, Discovery, was purchased for Dh1,100,000. The second, Sting Ray, was purchased for Dh220,000 ... The submarines arrived with two cars belonging to him and his wife. The submarines were not functional underwater.”

Jaubert claims his fellow employees were “coerced” to testify against him or face dismissal.

Originally hired in 2004 by Sultan bin Sulayem, the chairman of Dubai World, Jaubert was expected to build recreational submarines as the chief executive of Exomos Submarines. The plan was for his luxury underwater craft to serve as a niche product for marine tourism.

On a salary of about US$13,000 a month, Jaubert lived at the Garden View Villas in Jebel Ali, drove Hummers and a red Lamborghini shipped from Florida and cruised around in high-speed boats.

“The way [the job] was presented to me was basically I would have unlimited funds,” he said. “I could build the factory I wanted and develop the models I wanted. To me, it was the opportunity of a lifetime.”

Among his claimed achievements was the Nautilus, a 45ft vessel capable of carrying nine passengers and designed to look like the fictional submarine in Jules Verne’s Twenty Thousand Leagues Under the Sea.

“It was a remarkable vessel. A beautiful submarine. It looked like an antique. Because of the nature of how it looks, I scheduled international media coverage. You can imagine a submarine like that in the Palm Jumeirah; that picture would have circled the globe and would have brought a lot of exposure to the company and on its creator.”

Days before the planned September 2007 launch, however, he was fired. Jaubert believes this was a successful attempt to block his “working design” from ever being publicly shown to function.

He claims the submarine still exists, but is languishing in the open air with no maintenance.

Like a good spy, his defence is to call the facts in question: he says Dubai World’s auditors, who questioned him about faulty or missing equipment, were unqualified to assess what parts were missing or not.

“If I have an autopilot submarine system, do you know what it looks like? No. Same with them. They labelled it as missing but they did not know what it was,” he said.

Dubai World auditors questioned him for two years, he said.

His passport was confiscated and Jaubert estimates he was interrogated at least 20 times for hours on end by auditors, a prosecutor and police. He alleged in press reports that he was threatened with physical abuse.

He was ordered to repay the Dh14m. “I knew I was facing life imprisonment,” Mr Jaubert said. “They had my passport and I lost my job. When you don’t have your passport, you cannot survive in Dubai ... so I prepared my escape.”

Obtaining a bogus passport or a new one from the French consulate was out of the question due to travel bans that he knew would be flagging his name. Quitting the country without an entry stamp would pose a problem, as would going through Saudi Arabia. “That would just make your situation worse,” he said.

“In the end, I’m a sailor, I’m a navy officer, so to me the ocean was a natural way out.”

With his claimed background in espionage serving with French intelligence until 1993 – though it is rare for a spy, and often even an ex-spy, to admit that he is one – he claims he already had the abilities to concoct an elaborate escape.

“Military training, combat, skydiving, shooting, explosives, electronics, surveillance, there are so many things,” he said, reciting his claimed skills. “Manipulation, psychology,” he added.

Jaubert enlisted a friend from France, also said to be a former agent for France’s Direction Générale de la Sécurité Extérieure, to help map his getaway to a 35ft sailing boat positioned in international waters and crewed by his co-conspirator. They sailed for eight days, finally landing in Mumbai. According to Jaubert, he travelled from there back to Florida to be reunited with his wife and two sons, whom he had sent home beforehand.

“I had a formidable feeling of freedom,” he said.

“I may be a former military man and skydiver and all the commodore stuff, but for [the criminal charges] I lived in fear every single day. Once I found myself on a dinghy in the water, then it was my element.”

Now in the US, Jaubert, who is not an American citizen, but said he holds a green card for permanent residency, feels confident he has evaded the authorities in the UAE: “If they want to extradite me from the US, it’s going to take some legwork.”

His new book, he hopes, will also help exonerate him around the world. If nothing else, however, it is likely to make him some extra cash.

read also : xpress Gulf News Dubai  or The Washington Post






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Tuesday, 18 August 2009

Herve Jaubert fled Dubai dressed as a woman

source Arabian Business


A former French special agent who worked for Dubai World has spoken of his anger at being convicted in absence of defrauding the company out of millions of dirhams - a charge he strongly denies.

Herve Jaubert told Arabian Business of a carefully planned escape from Dubai aboard a rubber dingy and dressed in a burqa to evade police using skills he developed as a spy.

The former French naval officer, who is now living in the United States, said he is not worried about being tracked down to face his five-year prison sentence because he can prove his innocence.

“I deny everything,” he told Arabian Business during a telephone interview. “When I saw that I was convicted in absentia I was totally outraged. But no matter what the truth is going to come out eventually.”

One way he hopes to be able to do this is through his book outlining the story of his escape, which is due to be published in October.

Jaubert told Arabian Business he decided to flee the country last year after his passport was confiscated by police and he was fired by Dubai World.

“In Dubai, if you don’t have a passport and you don’t have a job you cannot survive,” he said. “I found myself in this situation. So instead of fighting it, I told the auditors I would pay them back. I did not sign anything, but I played the game.”

Meanwhile he was planning his escape. Jaubert sent his wife and children back to Florida where they had all been living before moving to Dubai in 2004, and once they were gone he went into hiding.

“Once I was alone in Dubai then I turned to what I used to do before as an intelligence officer.

“A friend would rent a room for me in a hotel with his passport so my details would never show up. I would stay in the hotel for three days and then change.

“I bought a sail boat, and then I bought a rubber dingy and I escaped on the dingy. When I was a secret agent for my country I used to do that - go in and out of countries on a rubber dingy - because no one pays attention to a rubber dingy.”

Jaubert left from a beach in Fujairah early one morning after sabotaging the only coast guard boat in the area to make sure no one could follow him.

He spent six hours aboard the rubber dingy before meeting his friend, who had sailed his boat into international waters, and the pair headed to India on a journey that took eight days.

“I’m a naval officer, so at that point I knew what I was doing,” he said.

“When I was a secret agent I was a ghost, but here it was different, I was not a ghost anymore. I decided to disguise myself as a woman and then I became a ghost.

“When you are covered from head-to-toe in an abaya and veil nobody talks to you, nobody looks at you. Wearing the abaya nobody bothered me, it’s like I never existed.

“That’s the best disguise you can find because even a police officer can not talk to you.”

Jaubert was sentenced to five years in jail and fined AED14m by Dubai Criminal Court at a hearing in June at which he was not present.

The court was told that Jaubert’s company, Seahorse Submarines, had bought equipment worth AED11.8m for Exomos, the submarine division of Dubai World, but that it did not all arrive.

Jaubert had a contract with Dubai World to build two submarines, but prosecutors told the court that when the vessels were delivered they were incomplete and faulty. He wrote to Dubai World and agreed to settle the matter by paying an initial AED3m, but he fled the country before handing over any money.

My book is going to come out and people are going to know the true story and then I will put it behind me,” Jaubert said.

He is even confident that readers in Dubai will be able to get a copy.

“There’s no way this book is going to be available in Dubai in the open, but I’ve found a way. There will be some tricks, if you want. The book will be disguised. If you order the book you might receive a book on flowers or furniture, but it’s just a cover,” he said.

Related : Dubai Police to track down convicted sumarine fraudster




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