Dubai defaults! but is not called a default!!!!! Dubai Seeks Debt Delay, Some Units Cut to Junk.
Protectorate of the British. Lap Dogs of same, learned the British ways of not calling a sword a sword.
Dubai Seeks Debt Delay, Some Units Cut to Junk
By Matt Smith and Enjy Kiwan
November 25, 2009
DUBAI/NEW YORK (Reuters) - Dubai said on Wednesday two of its flagship firms planned to delay repayment on billions of dollars of debt as a first step toward restructuring Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.
The sudden move by the Gulf government led Standard & Poor's and Moody's Investors Service to deeply downgrade several government-related entities. Moody's slashed some units to junk status and S&P said the restructuring could be considered a default.
The government's announcement, which said consultants Deloitte had been appointed to help with the restructuring, sent the cost of insuring Dubai's debt against default soaring and bond prices tumbling.
State-run Dubai World has $59 billion of liabilities, its subsidiary Nakheel said in August, a large proportion of Dubai's total debt of $80 billion.
Analysts expect financial support from deep-pocketed Abu Dhabi, a neighboring member of the United Arab Emirates, to keep Dubai afloat. But Dubai will likely have to abandon a flamboyant economic model that focused on heavy real estate investment and inflows of foreign capital.
"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, and most analysts were of the view that Nakheel's commitments would be met," said Shakeel Sarwar, head of asset management at SICO Investment Bank.
SIX-MONTH STANDSTILL
The government said in a statement: "Dubai World intends to ask all providers of financing to Dubai World and Nakheel to 'standstill' and extend maturities until at least 30 May 2010."
Moody's cut ratings on some government-related entities to junk status, while S&P cut ratings on some entities to one level above junk.
S&P said the restructuring "may be considered a default under our default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity." |
