Interbank rates ease after Dubai World statement

UAE's interbank offered rates fell on Tuesday in the wake of a statement from Dubai World, and more comments from government officials.

The three-month rate fell to 1.90500 percent on Tuesday’s fixing from 1.94125 percent in the previous fixing on Monday, the central bank said on its website.

The three-month rate is now lower than it was on Nov. 25 when Dubai World announced its plans to ask creditors to delay debt payments till May 2010, rocking global markets.

The rate, fixed prior to the announcement, had been 1.91875 percent.

Dubai World, the government-controlled conglomerate that led the transformation of Dubai into a regional hub for finance, investment and tourism, unveiled details of a plan to restructure $26 billion in debt late on Monday, covering obligations held by its main property firms, Nakheel and Limitless.

“This is definitely good news, it shows they are still committed to their payments and it removes all fears that this is a complete default,” Hassaim Arabi, chief executive at Gulfmena Alternative Investments.

Government officials reiterated on Monday that the restructuring process will be in the interest of all parties involved.

UAE central bank governor Sultan Nasser al-Suweidi said on Monday that there was no reason for concern as UAE banks had already increased their capital in the wake of last year’s global financial crisis.