12/14/2009, 00.00
EMIRATES
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Abu Dhabi to cover Dubai debts for 10 billion dollars

Less than half that amount (4.1 billion) will be used for Nakheel, the rest for Dubai World. News leads to rise in Asian stock markets. A new law on bankruptcy being prepared for Dubai.

Dubai (AsiaNews / Agencies) - The government of Dubai has announced this morning that the emirate of Abu Dhabi has granted 10 billion dollars to cover part of its debts. Approximately 4.1 billion will be used to repay the sum of the Islamic bonds which mature today for the real estate giant Nakheel, part of the holding company of Dubai World. In a statement released today by e-mail, Dubai, affirms that the rest of the loan will be used "for creditors and contractors."

On 25 November, the Dubai government has shaken all the financial markets for weeks asking the creditors of Dubai World - owned by the emirate - to implement a 6 month moratorium to pay off their debts, which are around 59 billion U.S. dollars nearly 75% of the entire debt of Dubai.

In making the announcement today, Sheikh Ahmed bin Saaed al-Maktoum, the Supreme Fiscal Committee chief, said he wanted to ensure "investors, financial and commercial creditors, employees and our citizens that our government will always act in accordance with market principles and with internationally accepted commercial practice”. He also announced that the emirate is preparing a new law on bankruptcy. "This bill - he said - will be used in cases where the Dubai World and its subsidiaries were unable to reach an acceptable restructuring of its remaining obligations." As soon as the news spread, the Asian markets began to recover ground.

Experts began to breathe a sigh of relief as Abu Dhabi has offered in practical terms "to pay the bill".   The move of the emirate of Abu Dhabi was signalled by AsiaNews (See AsiaNews.it, 27/11/2009 Emir of Abu Dhabi to buy Dubai for US$ 80 billion), although in the following days, Abu Dhabi had indicated that it would "choose" how to assist Dubai and that did not mean that "Abu Dhabi will sign off all its debts."

Abu Dhabi is the largest of the Emirates and a major exporter of oil

 

 

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