Dubai's debt default - another bubble had popped

Dubai's main investment fund seeks debt payment delay

We had a few fascinating threads on Dubai, now archived:
Laid-Off Foreigners Flee Dubai - 3000 abandoned cars at airport
Is Dubai the next big thing? How can we gain investing there? Any ideas?
Investment in Dubai Real estate?
Real Estate Boom in Dubai
The dark side of Dubai's slave based economy

Sic transit gloria mundi...

BBC said: The government-owned investment company behind Dubai's rapid development drive has asked its creditors for a six-month delay on repaying its debts.

Dubai World, which has total debts of $59bn (£35bn), is asking creditors if it can postpone its forthcoming payments until May next year.

Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring.

The company has been hit hard by the global credit crunch and recession.

The malaise has also affected Dubai as a whole, where following six years of rapid growth, the economy has slumped since the second half of 2008.
This has led to Dubai property prices falling sharply.

'Shocking'

The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.

"It's shocking because for the past few months the news coming out has given investors comfort that Dubai would most probably be able to meet its debt obligations," said analyst Shakeel Sarwar, of SICO Investment Bank.

Dubai is one of the seven self-governing Emirates or states that make up the United Arab Emirates.

Analysts say the Dubai government has paid the price for a flamboyant economic model centred on foreign capital and giant construction projects.

Some have speculated it is likely to turn to the more economically conservative Abu Dhabi emirate to bail it out.

Global credit rating agency Standard & Poor's, which rules on a company's or government's ability to repay its debts, said the announcement "may be considered a [debt] default".
As a result, it said it was downgrading its ratings on several Dubai government-related financial entities.
The Dubai World announcement was made on the eve of the Eid al-Adha Muslim festival, which will see many government agencies and companies close in Dubai until 6 December.

Dubai World! Dubai World! Party time! Excellent!

aeiouy said: Does that mean the plans for making an island in the shape of Michael Jackson are on hold?

Too funny. I really hope it was meant to be funny. Kinda sad if it would be true.

Sayangm said: aeiouy said: Does that mean the plans for making an island in the shape of Michael Jackson are on hold?

Too funny. I really hope it was meant to be funny. Kinda sad if it would be true.Actually, I heard they had plans to erect a sold gold statue of his pet monkey.

(bubbles you perv!)

Dubai has no oil revenue at all, so they are even more desperate for other sources. Abu Dhabi has been propping up Dubai for a while now, almost all the projects in Dubai are funded by Abu Dhabi's oil.

SUCKISSTAPLES said: Didnt dubai world buy a big chunk of Citi??

I believe that's the Saudis.

 

Edit:
Actually, you were right: http://www.reuters.com/article/bankingFinancial/idUSSP7190720071127
Circa 2007
NEW YORK/DUBAI (Reuters) - Citigroup Inc (C.N) is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive.

The capital injection will shore up Citi's balance sheet, which has been hurt by some $6.8 billion of writedowns and losses in the third quarter, and the potential for another $11 billion in the fourth quarter.

Best line from the article:
The sale to the $650 billion Abu Dhabi Investment Authority, the world's largest sovereign wealth fund, may also signal the freefall in U.S financial stocks is close to ending, analysts said.

NEW YORK/DUBAI (Reuters) said: Citigroup Inc (C.N) is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive.
Suckers... 5% of Citi is worth under $5B today, down 33% and I'm sure it was down more like 80% for a while there before the big bull market this year.

So where are the hotel and flight deals? Common people, black friday

The way they were building all those man made island projects you think Dubai's wealth will last forever.

Didn't they have a huge indoor ski hill too?

Apparently, this is bigger news than I thought:
Dubai debt fears hit world markets hard
Interesting that US$ was not mentioned as a safe haven this time:
Kit Juckes, chief economist at ECU Group, said the developments in Dubai and in the currency markets are related as the fall in risk appetite has pushed money into government bonds and into safe haven currencies such as the Swiss franc and the yen.

This, he said, is "testing the tolerance of central banks to see their currencies cause further damage to their economies."

Already there have been unconfirmed reports that the Swiss National Bank has intervened to buy dollars to prevent the export-sapping appreciation of the Swiss franc.

Meanwhile, Japanese Finance Minister Hirohisa Fujii tried to assure the market he was closely monitoring the situation and would "take appropriate steps if foreign exchange rates move abnormally." But that did little to ease investor worries.

neophyte said:
Interesting that US$ was not mentioned as a safe haven this time:


Already there have been unconfirmed reports that the Swiss National Bank has intervened to buy dollars to prevent the export-sapping appreciation of the Swiss franc.

Read the article that you quoted again.

ZenNUTS said: Any deal on H&B @ Dubai?

Yeah, the hookers and blow in Dubai come with a free catapult ride and limb removal (or some other draconian rule of law).

Time to stock up on skyscrapers, they'll be a steal now.

For H&B enthusiasts: RE bubbles are also attracted to each other
The standstill will likely not immediately affect CityCenter, an $8.5 billion casino complex opening next month in Las Vegas that is half-owned by Dubai World. A Dubai World subsidiary and casino operator MGM Mirage agreed with banks in April to fully fund and finish the six-tower, 67-acre development of plush resorts, condominiums, a retail mall and one casino on the Las Vegas Strip.

dshibb said: Dubai H's are probably awesome though. Its good to try new things at least once."I'd walk a mile for a Camel."

I just checked asia market in their late morning: in the second day the selloff continuued, but lot milder than yesterday. Greenback's slide reversed, I take that as a sign of flight to quality moves by more people.

This is short term bearish for oil. If the contagion spreads among the gulf economies, it could be long term bearish for oil too (which would be good, obviously). Fingers crossed.

nycll said: I just checked asia market in their late morning: in the second day the selloff continuued, but lot milder than yesterday. Greenback's slide reversed, I take that as a sign of flight to quality moves by more people.

This is short term bearish for oil. If the contagion spreads among the gulf economies, it could be long term bearish for oil too (which would be good, obviously). Fingers crossed.You take it as a flight to "quality"?

Boy, you're going to get a shock in a few months, when the REAL flight to quality occurs.

Right now, all we have is a bunch of foolish children fighting for a chair as the music stops. Next comes a part of the game that you probably didn't play in school... when the kids pick up the chairs and start beating each other about the heads and bodies.

Non oil producing nations can't cause bearish signals in the oil markets.

dshibb said: Non oil producing nations can't cause bearish signals in the oil markets.When was the last time you checked oil price?

The media will get excited over this new story and forgetta bout it in a week or so when it doesn't have any legs to it.

tolamapS said: brettdoyle said: ZenNUTS said: Any deal on H&B @ Dubai?

Yeah, the hookers and blow in Dubai come with a free catapult ride and limb removal (or some other draconian rule of law).

That's not entirely true. Prostitution is rampant in Dubai.

How does that work with Berkas? Do you get to peek first or does it just stay on for the entire transaction?