Dubai completes two-third of debt restructuring: Exotix

DUBAI — Two-third of bank debt restructuring in Dubai are now complete following the resolution of Dubai International Capital’s $2.5 billion restructuring, Investment bank Exotix said on Thursday.

By Issac John

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Published: Fri 20 Apr 2012, 11:10 PM

Last updated: Sat 4 Apr 2015, 7:19 AM

The London-based bank said since the start of the Dubai World crisis in 2009, there had been 11 debt restructuring situation across various Dubai government related entities, or GREs, totalling $34 billion in debt. Six of these restructuring, totalling $21.9 billion are now complete, Exotix said.

The bank estimates Dubai GREs still have $12.2 billion in bank debt negotiations outstanding, after completing several restructurings in the last year.

The investment bank said to date bankers have shouldered all such debt restructuring costs, while bond holders have remained completely untouched.

In the first week of April, Dubai Holding, an investment conglomerate, said its private equity arm, Dubai International Capital, has reached an agreement with creditors to restructure $2.5 billion of debt.

DIC, which has stakes in UK-based budget hotel chain Travelodge and German alumina products maker Almatis, will extend $2.15 billion of outstanding bank loans by five years at an interest rate of two per cent.

EFG-Hermes, Middle East leading investment bank, recently raised Dubai’s market ranking to “overweight” from neutral as the emirate restructured its debt. .

“Macro environment continues to strengthen in Dubai,” analysts Fahd Iqbal and Simon Kitchen wrote in a research note. “Debt restructuring will no longer be a major overhang by year-end, with no government-related entities expected to default.” Overweight is part of a three-tiered rating system. If a stock is recommended to be “overweight”, it is a better value for money than others.

Another GRE, Drydocks World — Dubai, a shipbuilding and repair conglomerate, also announced that it got an overwhelming backing from majority of its lenders” for its $2 billion debt restructuring bid.

The confirmation about the huge support from lenders came in the wake of the company filing a claim with a special Dubai tribunal for insolvency protection from creditors by invoking ‘Decree No 57’ issued by Dubai Ruler in 2009.

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