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’Snap news
Breaking pre-market news on Tuesday,
- Dubai World to carry out restructuring in an ‘equitable way’ – statement.
- GSK completes extension of strategic collaboration with Aspen – statement.
- Xstrata copper enters agreement with Zijin mining group – statement.
Dubai rejects debt guarantee
Dubai’s government will not guarantee the debts of Dubai World, the state-owned holding company struggling with $59bn in liabilities, arguing that lenders were mistaken to think there would be sovereign backing.
Dubai World begins restructuring
Dubai World said on Monday that other companies in its group such as DP World, Jebel Ali Free Zone and Istithmar would be excluded from its restructuring because they were financially stable. In its first statement since the state-owned company shocked markets last week with news of a debt-stand-still,
CDS report: Dubai has more in common with Latvia than Iceland
Gavan Nolan of Markit wrote this CDS report
European credit and equity markets suffered a torrid session today as the debacle in Dubai sparked a fresh bout of risk aversion. The Markit iTraxx Europe index ended the day at 89.5bp,
Camel finance
No, that’s not an outrageous slur. It’s a reference to this — the Souk al-Manakh.
This was former camel trading venue was home to the 1982 stock market crash in Kuwait, which wiped out many billions in regional wealth at the time. Older investors in the Gulf will see it as a history lesson for Dubai in how one localised problem can suddenly become much wider and deeper.
What next for Nakheel?
Hindsight is a wonderful — and sometimes amusing — thing.
That was part of a recent web project for Emirates property-developer Nakheel — as well as the basis of a billboard campaign across Dubai.
Could the Dubai debacle trigger a Dirham devaluation?
Highly unlikely, is the sensible answer.
The UAE dirham, which has been pegged to the US dollar at a rate of 3.6725 since 1997, has the full faith and wallet of the state of Abu Dhabi behind it.
With Abu Dhabi estimated to have billions of dollars of foreign currency reserves,
The issue of shariah compliance and the Nakheel sukuk
When is a sukuk not a sukuk?
When it fails to be shariah compliant, of course.
And the key issues, it seems, that may or may not make a sukuk shariah-compliant relate to principal protection and the bondholder’s unsecured status.
UAE post-holiday hit
As expected, the Abu Dhabi and Dubai stock exchanges have been hit with a wave of selling on their first day open since the Dubai debacle broke.
But with brokers having predicted the indices to be suspended limit down,
Haircuts in Dubai
So the United Arab Emirates has sort-of-but-not-quite stepped in to save Dubai — pledging liquidity support for UAE banks.
At the same time, however, speculation over just what sort of debt restructuring lies in wait for Nakheel bond investors continues apace.
UAE push to head off debts damage
The United Arab Emirates on Sunday stepped in to shore up its banks and head off any potential capital flight as the nation’s authorities attempted to counter concerns over Dubai’s debt problems, the FT said.
The intrinsic unimportance of Dubai World
Dubai is not systemically significant, according to the FT’s “Maverecon” blogger Willem Buiter. Still, the crisis in the emirate may yet do some systemic good by alerting fiscal policy makers to the vulnerability of their nations’ fiscal-financial positions,
CDS report: Dubai contagion overdone?
Gavan Nolan of Markit wrote this CDS report
Last week we asked is “Greece the only sovereign on a slippery slope?” We did not have to wait long for our answer. But it did not come from the less creditworthy regions of the eurozone,
Of silver linings and messages from the Sheikh
From the editorial columns of The National, the Abu Dhabi-based English language newspaper edited by former Telegraph editor Martin Newland:
A silver lining in Dubai World
…But as the dust settles,
European banks most exposed to UAE debt [UPDATED]
Here’s a nifty breakdown of global banks’ exposures to the United Arab Emirates, via Reuters on Friday.
According to the Bank for International Settlements, banks have claims totalling $123bn on debtors in the UAE,
Dubai sparks market turmoil
Markets around the world saw indiscriminate selling of stocks linked to the Middle East and many financial stocks following news of Dubai World’s unexpected standstill on much of its $59bn of debt. Amid a religious holiday in the Middle East,
Dubai default fears spook investors
Global stock markets endured heavy selling on Thursday amid fears of a default by Dubai World and turmoil in foreign exchange markets where the yen surged to a 14-year high against the dollar. Investors fled to less risky assets.
Abu Dhabi hardest hit by Dubai World
Abu Dhabi Commercial Bank may be owed $1.9bn by Dubai World, making it the largest creditor outside the emirate to the Dubai-owned company seeking to reschedule debt, reports Bloomberg. Stocks plunged on Thursday after Dubai World sought a delay on repayment on much of its $59bn of debt.
Caveat emptor: Risk factors from the Nakheel prospectus
A quick perusal of the risk factors section in the Nakheel ’09 bond prospectus shows investors were warned about many things.
Firstly, Dubai World, the parent company of Nakheel, “is not required to,
The clairvoyant Nakheel short sellers
It seems that Wednesday’s surprise decision by the Government of Dubai to ask for a debt standstill agreement at Dubai World — and by association its property arm Nakheel — did not shock everyone.
Some people were preparing for a fall in Nakheel Development’s sukuk.
Can nothing go right for Dubai?
Hello, is anybody there?
From Reuters on Thursday afternoon:
A conference call for bond holders of Dubai-owned property firm Nakheel was postponed on Thursday after phone lines were overwhelmed by too many people calling in.
Moody’s statement on Dubai downgrades
Selected highlowlights from Thursday’s early statement.
Emphasis ours.
Moody’s downgrades Dubai GRI rating
DIFC, November 26, 2009 — Moody’s Investors Service has downgraded the ratings of all six government-related issuers (GRI’s) in Dubai and left them on review for possible downgrade.
A friend in need…is a friend in de(fault)?
Dubai’s government stunned the debt markets on Wednesday by asking for a 6-month standstill on the debts of its flagship holding company Dubai World.
The shock move came just hours after the Government of Dubai raised $5bn via a bond issue,
A forced seller at the LSE?
Shares in the London stock exchange have taken a beating in early trading on Thursday.
See if you can figure out why.
From Bloomberg:
Traders obviously fear the Borse Dubai stake will be dumped in the market.
Dubai shock after debt standstill call
Dubai on Wednesday shocked investors by asking for a debt standstill at Dubai World, the emirate’s flagship holding company and developer of some famously extravagant real estate projects. The move raised the spectre of default in the Middle East’s trading hub.
Markets reel over Nakheel default fears
Bond markets reacted with alarm to Wednesday’s news that Nakheel, the property arm of government-owned Dubai World, was restructuring a bond due for redemption in December, amid fears that Nakheel’s move will be considered a technical default.
CDS report: All eyes on Dubai World
Gavan Nolan of Markit wrote this CDS report
European credit indices rallied today as the economic climate remained supportive of risk assets. The Markit iTraxx Europe index closed at 84bp, 1.5bp tighter than yesterday’s level.
“The Sun Never Sets on Dubai World.” Really?
So goes the motto of Dubai’s flag bearer in global investments.
True to our claim “The Sun Never Sets on Dubai World”, our investment portfolio extends across 100 different cities in the world. We are spread across a wide spectrum of strategic industries and sectors ranging from Ports Management,