Don't miss




Bayrou decides to march with Macron

Read more


France's Topsy-Turvy Election: Uncertain outcome as insurgents blow away old guard (part 1)

Read more


France's Topsy-Turvy Election: Uncertain outcome as insurgents blow away old guard (part 2)

Read more


Amnesty chief urges France to 'stay true to its values'

Read more


Film show: 'Certain Women', 'Rock’n Roll' and 'A Wedding'

Read more


#BringBackOurInternet: English-speaking Cameroon hit by digital blackout

Read more


Preaching coexistence: Avant-garde mosque opens in Lebanon's Druze heartland

Read more


Prison guards turn guns on prisoners in Chile, and thousands of migrants stuck in smoky warehouses in Serbia

Read more


French presidential race: Le Pen makes groundbreaking visit to Lebanon

Read more

Middle east

Abu Dhabi will 'pick and choose' how to assist debt-ridden Dubai

Text by News Wires

Latest update : 2009-11-28

Abu Dhabi will selectively assist neighbouring Dubai with its debt troubles, officials say. Dubai said on Wednesday it would delay debt payments issued by a major state-run consortium, sending global markets into a slide.

REUTERS - Abu Dhabi, capital of the United Arab Emirates and one of the world's top oil exporters, will "pick and choose" how to assist its debt-laden neighbour Dubai, a senior Abu Dhabi official said on Saturday.

"We will look at Dubai's commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts," the official in the government of the emirate of Abu Dhabi told Reuters by phone.

A policy of selectively assisting cash-strapped companies affiliated with the government of Dubai, instead of providing blanket assistance, challenges assumptions made by many investors who assumed that wealthy Abu Dhabi provided a complete safety net for its racier neighbour.

Dubai's crisis exploded on Wednesday when the emirate, known for flashy lifestyles and the world's tallest building, said it would delay payment on debt issued by one of its flagship firms, angering investors and sending global markets sharply lower.

"Some of Dubai's entities are commercial, semi-government ones. Abu Dhabi will pick and choose when and where to assist," said the official, who declined to be identified because he is not authorised to speak to the media.

Abu Dhabi, which pumps 90 percent of the oil that make the United Arab Emirates the world's third-largest oil exporter, has already provided $15 billion in indirect support for Dubai through the UAE central bank and two private Abu Dhabi banks.

How much more support the emirate provides for its cash-strapped neighbour, however, will depend on how Dubai clarifies its stand on unresolved issues.

"Until things become clearer, it is very difficult to make any further investment decision on the bonds. Many things have to be clarified by Dubai," the official said.

Bank monitoring

The UAE central bank said it was closely watching events stemming from the Dubai debt crisis to ensure no harm results for the national economy, a spokesman for the central bank said on Saturday.

"The central bank is monitoring developments very carefully to ensure that there is no negative impact on the UAE economy," the spokesman told Reuters by phone.

Constitutionally, each emirate in the UAE is a separate legal entity within the loose federation, and each controls its own natural and financial resources. The federal government has no guaranteed access to those resources nor is it obliged to underwrite the liabilities of any emirate.

International markets were rocked when Dubai said on Wednesday it was instigating a major restructuring at one of its biggest holding companies, Dubai World.

As part of the restructuring programme, investors have been advised of a "standstill" in repayment of flagship real estate developer Nakheel's $3.5 billion Islamic bond, or sukuk, due for maturity on Dec. 14.

Dubai World had $59 billion of liabilities as of August, making up the majority of Dubai's total debt of $80 billion. International banks' exposure related to Dubai World could reach $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters LPC.

A statement from the Dubai government is expected on Monday, when the markets reopen following an extended break for  Eid, a religious holiday observed across the Gulf region.

Date created : 2009-11-28


    Dubai defends debt payment suspension as shares tumble

    Read more