Dubai Will Not Restructure Debt, Refinance a Possibility
The government of Dubai has quashed reports that it plans to restructure billions of dollars of maturing debt next year, but said that "refinancing" part of the debt was a "possibility."
"Reports about a plan by Dubai to restructure part of debt maturing in 2012 on government-related companies are untrue," head of the higher committee for financial policies Sheikh Ahmed bin Saeed al-Maktoum said in a statement released late on Wednesday.
Sheikh Ahmed however said that the Dubai government may look into "refinancing" part of the government companies' debt maturing next year "if it becomes necessary."
He described refinancing as "ordinary" and said it "greatly differs from restructuring." Restructuring of debt is normally carried out in distress situations unlike refinancing.
The Dubai government is fully ready to support its companies in all phases and through a number of options, Sheikh Ahmed said without elaborating.
Experts and Moody's Investors Service have estimated that maturing debt on Dubai's government-related entities next year at about $14 billion.
Dubai sent jitters throughout global markets in November 2009, when it said it needed to freeze payments on some $26 billion of debt owed by its largest group, Dubai World.
But the conglomerate succeeded in reaching an agreement with lenders to restructure $14.7 billion of debt. The debt on Dubai's government-related entities is estimated at $100 billion.
Economists have been bullish about growth prospects for Dubai's economy after it had contracted about 2.4 percent in 2009 following several years of rapid economic growth.
The economy grew by a mere 0.5 percent in 2010, according to the IMF, which expects it to expand by nearly three percent this year.
Source: Agence France Presse
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