Dubai group to pay US$4b debt in full
Source: Agencies |
August 9, 2011, Tuesday
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Print Edition
Print Edition
A DUBAI government-run conglomerate that controls some of the emirate's industrial powerhouses will repay in full US$4 billion worth of debt due this month, the city-state vowed yesterday, in a move that could reassure investors worried about the strength of the world economy.
Investment Corporation of Dubai (ICD), whose holdings include the Middle East's biggest airline, Emirates, is widely seen as the healthiest of Dubai's three major government-linked conglomerates.
Its decision to pay off the debt was nonetheless unexpected and signals rising confidence in the city-state, said Zafar Nazim, senior Mideast credit analyst at JP Morgan in London. He said investors had been expecting ICD to pay just part of the loans and then roll over the rest.
"It sends a strong signal that these guys are able to repay debt from their internal sources and ... have less dependence on capital markets," he said.
Yesterday's announcement by Dubai's government media office comes as world markets are slumping following Standard & Poor's one-notch downgrade last Friday of the United State's credit rating.
Dubai is still recovering from the effects of the global financial and the near-default of one of its key government-related business conglomerates, Dubai World. Debt problems at that conglomerate sparked credit fears that sent world markets reeling in late 2009.
ICD's executive director and CEO Mohammed al-Shaibani said his company has the resources and is committed to paying its debts. "This substantial repayment is the result of our strong portfolio of diverse and successful companies across Dubai, as well as the underlying strength of our economy," said al-Shaibani.
ICD also controls aluminum smelter Dubal, the Emirates National Oil Co, the Dubai World Trade Center real estate complex and owns part of Emaar Properties, the developer of the world's tallest tower.
Investment Corporation of Dubai (ICD), whose holdings include the Middle East's biggest airline, Emirates, is widely seen as the healthiest of Dubai's three major government-linked conglomerates.
Its decision to pay off the debt was nonetheless unexpected and signals rising confidence in the city-state, said Zafar Nazim, senior Mideast credit analyst at JP Morgan in London. He said investors had been expecting ICD to pay just part of the loans and then roll over the rest.
"It sends a strong signal that these guys are able to repay debt from their internal sources and ... have less dependence on capital markets," he said.
Yesterday's announcement by Dubai's government media office comes as world markets are slumping following Standard & Poor's one-notch downgrade last Friday of the United State's credit rating.
Dubai is still recovering from the effects of the global financial and the near-default of one of its key government-related business conglomerates, Dubai World. Debt problems at that conglomerate sparked credit fears that sent world markets reeling in late 2009.
ICD's executive director and CEO Mohammed al-Shaibani said his company has the resources and is committed to paying its debts. "This substantial repayment is the result of our strong portfolio of diverse and successful companies across Dubai, as well as the underlying strength of our economy," said al-Shaibani.
ICD also controls aluminum smelter Dubal, the Emirates National Oil Co, the Dubai World Trade Center real estate complex and owns part of Emaar Properties, the developer of the world's tallest tower.
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