Dubai World, the state-owned holding company grappling with $40 billion of debt, may be able to sell bonds to repay loans, including a $3.5 billion Islamic bond due at year-end, two bankers familiar with the group’s plans said.

Some of the money needed to settle the Islamic bond, or sukuk, of Dubai
World’s real-estate unit Nakheel PJSC may be raised from a bond sale
and the rest from local lenders, said the bankers, who declined to be
identified because nothing has been decided yet. Some of Nakheel’s
Middle Eastern bondholders may accept an offer to extend the bond’s
maturity, they said.

“Market sentiment has improved a lot,” said Abdul Kadir Hussain, chief
executive officer of Mashreq Capital (DIFC) Ltd., a Dubai-based fund
management firm. Dubai will still “not only have to be pretty
transparent about how the sukuk will be refinanced, but also what their
strategy is to tackle the emirate’s entire debt situation,” he said.

The cost of protecting against a default on Dubai’s bonds for five
years has fallen 70 percent from a two-year high in February, ranking
it between Lithuania and Lebanon, data compiled by Bloomberg show. A
successful repayment of the Islamic bond, on which investors were
concerned Nakheel may default after a slump in property prices, will
make it easier for banks to reschedule $12 billion of Dubai World’s
debt that mature during the next three years, the bankers said.

$20 Billion Rescue Fund

The decision to sell bonds will hinge in part on how much money Nakheel
gets from a $20 billion rescue fund the government is raising, the
bankers said. Both the fund and Dubai World’s creditors are seeking
more disclosure on the company’s business plan, cash flow projections
and its strategy to repay debt, they said. Creditors haven’t yet
reached consensus on giving Dubai World more time to repay the loans,
they added.

Dubai will probably complete raising the second $10 billion for the
support fund to help state-owned companies through the credit crisis by
the end of next month, Mohammed Alabbar, a member of Dubai’s Executive
Council said Oct. 9.

A spokeswoman for Dubai World declined to comment.

Credit-default swaps tied to Dubai’s bonds, or the cost to protect
against default, have fallen to 288 basis points from 976 basis points
on Feb. 17, according to CMA DataVision prices.

“The government of Dubai is likely to be able to generate some demand
from institutional investors in this region and internationally,” said
Chavan Bhogaita, head of credit research at National Bank of Abu Dhabi
PJSC. “The key will be how much demand exists and at what price.”

Investor Roadshow

Dubai World’s advisers, AlixPartners LLP, Deutsche Bank AG and NM
Rothschild & Sons Ltd. have drawn up alternative plans to repay the
sukuk depending on whether Dubai’s fund agrees to provide Nakheel with
between $1 billion and $2 billion this year, the bankers said.

The Government of Dubai will hold meetings with fixed income and
Islamic investors in Asia, the U.A.E. and Europe starting Oct. 22,
according to a banker involved in the transaction. The government is
canvassing investor interest in the Dubai Civil Aviation Authority’s
plan to sell bonds and pay down $1 billion of debt maturing next month,
two bankers familiar with the transaction said Oct. 18.

Dubai and its state-related companies borrowed $80 billion to help
transform the emirate into a financial services and tourist hub. The
seizure of global credit markets sparked concern the emirate will be
unable to repay some of its loans.

DP World, Nakheel

Dubai World said Oct. 15 it expects to save more than $800 million in
three years after completing a reorganization and cutting 12,000 jobs.
The Dubai government-owned company controls DP World Ltd., the world’s
fourth-biggest port operator, developer Nakheel PJSC, which is building
palm-tree shaped islands off the emirate’s coast, as well as Economic
Zones World, an operator of business parks like Jebel Ali Free Zone.

Dubai World had $59 billion in liabilities at the end of last year and
assets of $100 billion, Nakheel told Nasdaq Dubai Aug. 20. Some $18
billion of Dubai World’s debt is with companies such as DP World which
have enough cashflow to service their debt, two bankers said. The
remaining $22 billion is the concern, they said.

“We have the right organization size now for the current market,” Jamal
Majid Bin Thaniah, Dubai World’s chief executive officer, said in an
interview Oct. 15. The company has no “intentions at this point in time
to sell businesses within Dubai World.”

Dubai World and its advisers are negotiating with its lenders, which
number more than 70 and include Abu Dhabi Commercial Bank PJSC and
Emirates NBD PJSC, its two biggest creditors, a person familiar with
the situation said last week. Other lenders to Dubai World include
Credit Suisse Group AG, HSBC Holdings PLC, Barclays PLC, Lloyds Banking
Group PLC and Royal Bank of Scotland Group PLC, the person said.

Representatives of Emirates NBD, HSBC, Credit Suisse, RBS and Lloyds
declined to comment. Representatives for Abu Dhabi Commercial Bank and
Barclays weren’t available to comment.

Source: Bloomberg

Search to find what you want

• DP World free \ u0026quot, from 59 billion U.S. dollars debt with parents

    One of the world’s largest global ports operator – DP World – has not been implicated by its parent company’s plan to delay repayment on some of its $59 billion worth of current liabilities. “The Government of Dubai has confirmed that DP World and its debt are not included in

• Barclays recommends Nakheel sell bonds to buy Jebel Ali Free Zone and DP World

    Investors should sell Nakheel PJSC’s bonds after they rose as much as 75% from record lows, Bloomberg reported, citing a Barclays Capital report. Nakheel’s AED3.6 billion (US$980 million) floating-rate note due in May rose to 71 cents on the dollar yesterday, gaining 58% from the December 7 low, Bloomberg data

• DP World says makes debt service on time

    DP World a subsidiary of debt-laden state-owned holding company Dubai World DBWLD.UL, said it had paid regular coupon and profit obligations tied to a sukuk and a bond issue on time. The ports operator, one of the largest in the world, and listed on Nasdaq Dubai, said it had distributed

• No restructuring of DP World, Jebel Ali Free Zone

    DP World Ltd. and Jebel Ali Freezone will not be included in the restructuring of their parent firm, Dubai World, officials said on Thursday. After credit rating agencies Standard & Poor’s and Moody’s Investors Service downgraded some Dubai government-run companies following the announcement of the restructuring plan. Dubai World, with

• Gulf steel producers expect the banks tighten lending

    Steel producers in the Gulf believe Dubai’s debt problems will shake bankers’ confidence in funding new projects, while demand in the emirate is expected to drop further, steel producers said.

• Dubai, Abu Dhabi bailouts Consume $ 43B \ u0026 # 39, 09 oil wealth

    Dubai’s debt woes are becoming an albatross around the neck of oil-rich Abu Dhabi, which has committed the equivalent of almost 60% of this year’s oil income to bail out its ailing neighbor, according to Zawya Dow Jones calculations. Abu Dhabi, the largest of the seven emirates that make up

• UAE steel imports seen with a stable

    DJ reported that the United Arab Emirates is expected to import as much steel from Turkey in 2010 as in 2009 with more than USD 40 billion still projected to be spent on construction projects despite the debt troubles at Dubai World. Mr Serdar Kocturk chairman of the Istanbul Iron

• Dubai World Africa Delays Projects Amid downturn

     Dubai World Wednesday said it will put on hold some of its billions of dollars worth of planned investments in Africa, one mooted as a key market, as the global financial downturn impacts the government-owned conglomerate’s overseas projects. “Dubai World has put on hold a number of projects until the

• DP World crisis may hit India plan

    Dubai-based port operator DP World, which had planned to invest $12 bn in Indian container terminal industry, may struggle to do so because of the travails of its parent, Dubai World, the heavily indebted holding company of the Dubai government. Although Dubai World has said its debt restructuring process does

• Drydocks not included rebuilding in Dubai World

    Dubai World on Tuesday night said Drydocks World and its subsidiaries will not be included in the proposed restructuring process for Dubai World and its real estate related subsidiaries. “Drydocks World has been in constructive dialogue with its lenders for several months and its financial profile does not require it

• Dubai World reluctant to sell the port operator

    Government conglomerate Dubai World, which is restructuring to cope with the global crisis, is not in talks to sell its flagship DP World DPW.DI to a regional private equity firm, DP World said on Tuesday. Dubai World said in May it was in talks to sell part of DP World,

• Oil hovers above 77 U.S. dollars in Asian trade

    Global oil prices remained above $77 a barrel in Asian trade Tuesday mainly on weak dollar amid speculation credit losses in Dubai won’t derail the global economic recovery.

• DP World Australia is considering going public entity

    Port operator DP World, part of Dubai World conglomerate, is considering a A$1 billion ($884 million) initial public offering by spinning off some of its Australian assets, a media report said on Monday. DP World is expected to retain a substantial stake in the new listed entity, to be called

• Indian government sets navigation on the hat to Dubai Financial Crisis

    The government said it has sought detailed information from all ports associated with DP World to assess the impact of Dubai debt crisis on Indian shipping sector. “Alerted after reports of Dubai financial crisis, we have begun an internal examination of the situation

• Dubai World sale is approaching, debt plodding talks

    State-owned conglomerate Dubai World, which is restructuring some $22 billion in debt repayments, has yet to arrive at a formal standstill agreement with its creditors. The company rocked global markets on November 25 with plans to request a delay on repaying $26 billion in debt linked to its main property