Dubai has shocked investors by asking for a debt standstill at Dubai World, the governmentâs flagship holding company that has developed some of the worldâs most extravagant real estate projects. The move raised the spectre of default in the Middle Eastâs trading hub just as early signs of economic recovery have emerged. During the boom, Dubai rode the wave of easy credit generating phenomenal economic growth but was badly hit by the global credit crisis. Dubaiâs surprise move angered some investors who had been reassured by local officials for months that the city would meet all obligations on its $80bn (£48bn) of gross debt in spite of recession and a real estate crash. âInvestors view this as shockingly bad news,â said Rob Whichello of BNP Paribas. Two hours after announcing it had raised $5bn from two Abu Dhabi banks, the department of finance asked for a standstill until May 30 on all financing to the heavily indebted Dubai World and its troubled property unit Nakheel, which is due to pay back $4bn on an Islamic bond on December 14. Dubai also launched a restructuring of the government holding company, which oversees ports operator DP World, the UK-based P&O Ferries and troubled investment company Istithmar. Nakheel, the developer behind the cityâs Palm Islands that boast celebrity owners such as David Beckham, has had to shed thousands of staff and left contractors out of pocket as local property prices halved and credit dried up. A symbol of Dubaiâs pre-crunch excess, the government company has had to cancel plans for the worldâs tallest tower and a constellation of reclaimed islands, as collapsing cash flow left the developer on the brink. http://www.ft.com/cms/s/0/46b4065c-d9f7-11de-b2d5-00144feabdc0.html
Sounds like the Sheiks were betting that this global slump was just a minor bump in the road and things would come roaring back in no time
Two of the many abandoned cars around Dubai where expats fled when they couldn't pay off their debts, pics taken last weekend <img src="http://a05-b05.mypicturetown.com/P2PwebCmdController/cache/Oq%258nvQ5R_Cjv0uteZR*REFAMd4R%3Di0jxy8wTv6.E%26ZssTD97G4bQvcq03mH/item.JPG?rot=1"> <br> <img src="http://a05-b05.mypicturetown.com/P2PwebCmdController/cache/V16SPmqI-L-3iz*%3DCBw1PtaW9k%25*r-6IFh46ZaGTXf7Pzydh3%3DR2s2m3mlIO/item.JPG?rot=1">
This just in ... In what they call a "necessary move" the US Treasury and Federal Reserve have announced a special credit line of $30 billion to Dubai World. Dubai World will be allowed to draw on this credit line as necessary in order to make its debt payments in a timely fashion. In a prepared statement, Tim Geithner and Ben Bernanke suggested that several US banks could sustain "billions of dollars of losses" on Dubai World debt that they own. These banks include Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup. The statement also stated that the Federal Reserve will accept as collateral, any bonds issued by Dubai World. Wall Street banking analyst Dick Bove praised the move ...
he cost of insuring Dubai's sovereign debt against default continued to soar Thursday, after conglomerate Dubai World sought to delay debt payments. The company, which is the largest corporate entity in Dubai, has around $60 billion worth of liabilities and will seek a six-month "standstill" on debts with all lenders, news reports said. Dubai five-year credit default swaps soared to 571 basis points on Thursday, up 131 basis points from the close Wednesday in New York, according to CMA Datavision in London. That means it would cost $571,000 a year to insure $10 million of Dubai's sovereign debt. Five-year CDS spreads for other nations in the Middle East also rose, with Abu Dhabi rising to 169 basis points from 136.4. Qatar rose to 129.5 Thursday from 103.7, CMA said, while Saudi Arabia rose to 114.7 from 90.4 and Bahrain rose to 222 from 194.5.
Dubai has no oil, just sand, scorching temperatures half of the year. Just another bailout then, it looks like geithner and all are out there to bail not only dubai world but the whole world. Eventually debt will need to be repaid and the collapse will come. The Fed is no atlas, it will be crushed by the global debt it is taking on. Band of fools.
Dubai has no oil left that was why they diversified into property.... Wait! Did you mean cash for clunkers? I wonder what allowance they would have got for those old oil platforms...lol
True, but I would've asked for other collaterals as well, namely the heads that made this mess. I suppose the concept of "responsibility" is too abstract for some.
What a disaster. But try to protect the Arabs because they're great for business as they ALWAYS overpay