Debt restructuring almost over: Dubai

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Debt restructuring almost over: Dubai

Dubai has completed the “major bulk” of its debt restructuring and is comfortable in its ability to tap bond markets when it deems it necessary, a top Dubai official said.

By Agencies

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Published: Sat 24 Sep 2011, 8:58 AM

Last updated: Tue 7 Apr 2015, 5:56 AM

Mohammed Al Shaibani, Director-General of Dubai Ruler’s Court and Chief Executive of the Investment Corporation of Dubai, said in an interview that officials continue to implement corporate governance and other changes required as part of its restructuring, but insisted there is “no issue” as it pertains to the emirate’s efforts to restructure the debt load of various state-owned and government tied corporations.

He vowed to stand behind Dubai’s “strategic investments” including those facing debt refinancing such as DIFC Investments LLC. The government doesn’t anticipate that DIFC Investments, a unit of the emirate’s tax-free business financial centre, or Jebel Ali Free Zone FZE, another business park, will have trouble refinancing bonds due next year, said Al Shaibani.

“We’ll back up any strategic investment we have,” he said. “As Dubai, I have interest to back up the government entities and the government-related enterprises — anything that’s sizeable with a major benefit to the economy.”

Al Shaibani said he expects global leaders to respond aggressively as needed amid growing fears that economic woes in Europe and the US will cause another global downturn. He said officials are much more prepared to deal with crisis in the wake of the 2008 financial crisis.

“I doubt there will be another recession,” Al Shaibani said. “Now people have seen it, they are quite prepared ... I’m very confident they will find a solution.”

As Dubai seeks to restructure its debt load, Al Shaibani said he was optimistic that the emirate could access capital markets if it deems it necessary. Regional and local markets continue to be open, even as international markets wrestle with concerns about Europe’s sovereign debt issues, he said.

“You cannot close your shop as a bank or a lender. People will come forward, so we are quite confident if we do go to the market,” Al Shaibani said, adding that there is quite a bit of liquidity in the markets, in the local markets, regional markets.”

Al Shaibani also said there is no set timeline for an initial public offering by one of its prize assets: Emirates airline. He said the airline is still growing, so any near-term IPO would be “giving up value”.

“It doesn’t need liquidity, it has what it takes, it’s has good cash flow, so from that perspective there is no time urgency,” Al Shaibani said.

Dubai borrowed at least $129 billion to turn itself into a tourism, trade and financial services hub, according to Credit Suisse Group AG. Policymakers are keen not to repeat past mistakes, said Al Shaibani. “We learned quite a bit in the process how to conduct our business,” he said. “We took things for granted in the beginning. When everything is booming you kind of overlook certain things.”

Restructuring has helped give Dubai and its companies “breathing space” and ruled out any “fire-sale” of its assets, Al Shaibani said.

“We planned the process of restructuring to be between five to eight years,” he said. “Why would I sell anything today? If we do sell something, most likely we would be selling it closer to the five years and eight years.”

Only “some smaller companies” may need to restructure their debt, Al Shaibani said. “There are some companies that had a little bit of exposure to the property sector and they need to clear up some issues and focus on growth again.”

The government may not extend the same helping hand to all companies. For Drydocks World LLC, a company restructuring $2.2 billion of debt, the responsibility falls more on its parent, Dubai World, Al Shaibani said.

“Personally, I think Dubai World should really play a major part in supporting Drydocks, not so much the government,” he said.

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