Monday, May 10, 2010

Dubai Holding Debt Restructuring


Asa Fitch over at The National has an article about Dubai Holding which has left me scratching my head.

If I'm not mistaken, in the last day or so, I read a statement by HE AlSuwaidi or maybe HE AlTayer that there would be no additional mega debt reschedulings.

And I definitely recall Shaykhk Ahmed Bin Saeed Al Maktoum saying around mid April that Dubai Holding doesn't have any problems.  Apparently not a single one.  And that's quite an enviable position to be in for a company at any time, but especially in the current environment.

So you can imagine my surprise when I read in both the Financial Times and The National that indeed Dubai World (Oops, that should be Dubai Holding) had engaged advisors to study the financial condition of its two key subsidiaries.
"The accounting companies are being asked to evaluate the subsidiaries’ financial health and make recommendations that could include pushing for lower interest rates and delaying debt repayments."
Either or both of these would fit my bankers' definition of a restructuring.  And would as I've noted before fit that of IFRS as well. 

6 comments:

Laocowboy2 said...

I would rather imagine that almost every Dubai Government-related corporate is considering their restructuring/refinancing options. If they are not, they should start asap. In current markets, non-UAE banks may well be reluctant to enter new medium term transactions to replace maturing facilities (even if they were participants in the old facility). Even rolling over 100% of the S/T debt may prove to be a struggle. As regards non-GCC banks, I would imagine that the ructions of 2009-10 will have seen country limits being cut (with the UAE being treated as more than a single country limit market) - limiting credit availability to even the better names. I expect a fair number of "voluntary" restructurings to follow.

the real nick said...

So you can imagine my surprise...Dubai World had engaged....

This should be Dubai 'Holding'. Surely a typo?

But you should be surprised that it took so long for Dubai Holding to admit, indirectly and surrepetitiously, that their banking and investment subsidiaries have problems. It would be surprising if they didn't.

Abu 'Arqala said...

For Laocowboy2

Yes, but the nice thing for borrowers is that in a few years bankers will pretty much have forgotten. And financing for the indoor F1 track in Fujairah will be forthcoming. I've already started working on the plans.

The Real Nick will construct and I'm going to be arranging the financing (though not providing any myself as that would be a conflict of interest).

Abu 'Arqala said...

TRN

You can see just how confused I was.

In more ways than one.

Dubai World, Dubai Holding, Dubai Duty Free - It's so hard to tell them apart.

Laocowboy2 said...

For Abu 'Arqala

Confusion ref Dubai Biz Various understandable - three (plus) names, one pocket.

More generally your are oh so sadly right about collective Alzheimer's in the banking industry. I started lending in the UAE in 1977 and have seen the same nonsense come round time and time again, and not just in the UAE. Thankfully I have been out of banking for over a decade now.

Abu 'Arqala said...

Laocowboy2

One of my buddies used to describe Dubai as a Ponzi scheme. The government sold land to itself, declared a profit, then developed real estate on the land using a government contractor and the contractor declared a profit, then it sold the developments to buyers, with the government developer declaring a profit. With government owned/affiliated banks providing finance in the various stages.

Since you're an old hand and appear to have some knowledge of the UAE, were you "active" during the great overdraft lending collapse in the UAE which gave us the government owned consolidated banks we have today?