THE SUN NEVER SETS ON DUBAI WORLD?
According to their website, Dubai World is Dubai's flag bearer in global investments. As a holding company it operates a highly diversified spectrum of industrial segments and plays a major role in the emirate's rapid economic growth. Its primary aim is to play the role of a growth engine that powers development both locally and internationally.
Dubai World's investment spans four strategic growth areas of 21st Century commerce namely, Transport & Logistics, Drydocks & Maritime, Urban Development and Investment & Financial Services.
Its portfolio comprises some of the world’s best known companies and a number of outstanding projects. This includes DP World, one of the largest marine terminal operators in the world; Drydocks World & Dubai Maritime City designed to turn Dubai into a major ship-building and maritime hub; Economic Zones World which operates several free zones around the world including Jafza and TechnoPark in Dubai; Nakheel the property developer behind iconic projects such as The Palm Islands and The World among others; Limitless the international real estate master planner with current development projects in various parts of the world; Leisurecorp a global sports and leisure investment group, reshaping the industry by unlocking value across investment, development and brand opportunities; Dubai World Africa which oversees the regional development and portfolio of investments in the African continent.; and Istithmar World, the group's investment arm that has a global footprint in finance, capital, leisure, aviation and various other business ventures.
By the looks of the above statement, I don't think one big entity like this can fall in one day just because of one story about debts.... I believe this issue is about some financial deal that didn't go well. Dubai World, as I know it is one place where the organization will try to safeguard their reputation and they will put their best effort to ensure that whatever problems they have will be solved amicably - YES..even with the banks and creditors. As I speak now, I'm sure Dubai World plans on heavy corporate debt restructuring as they have assets that are worth a lot more than their debts.
I know that there have been denials by the emirate's goverment that the conglomerage had long operated as a standalone entity but again a project of this magnitude will definitely in the knowledge of the government - otherwise it wouldn't exist!! Yes, some analysts (or speculators) proudly saying that banks will suffer but I think the statement is incorrect.Lemme put it straight, banks (esp. in Abu Dhabi) can still ABSORB such losses.
After this news broke out, stocks in UAE plunged but I think it's temporary. But one senior official of the Dubai Government was too hasty in giving out statements and denials...I think he should rethink his statements again.
Being in Malaysia, I've read MUCHabout Dubai World that has always been (as still would be) the future hub for finance and tourism in the region.
Back to Dubai World's plan on CDRC, by the looks of it, the situation of 'plunging' is temporary. Every investor is waiting clarification not dumping the stocks. Restructuring of $26 billion (USD) and $6 billion sukuk bond are not petty deals. I'm sure the banks will find this a good deal and they will see the stocks jumps up the next few days and Dubai World will back on its feet.
Global effects???? NO...I don't think so.
"THE SUN NEVER SETS ON DUBAI WORLD"
When I wrote this article today - December 2nd, 2009 and posted it on Facebook, this is what I got back from UAE :
Syed Muhammad SyedAbdullah Al-Husayni wrote :
Assalaamua'aleykum Habeeb Nik, I think this is the 1st time I wrote on your wall. Never had much time. Yes, I agree with your opinion on Dubai World. I also think that the current recovery of oil prices (>USD76/barrel) despite the weakening dollar will assist recovery. I just receive news that UAE esp. Abu Dhabi is helping Dubai. We are also expecting commodities and equities market will be correcting. I don't know if you read the latest news, Dubai World has successfully dealt with the banks as you have predicted. And you are right too - now FTSE has risen - almost 2.0%. Keep up the writing and Shukran from me - a distant relative.
My response was :
Wa'alaikumussalam Sayyid. Thank you for your valuable comments. I think everyone is being matured nowadays...they don't panic easily. Yes, I have also received words saying that Dubai World has managed to calm the market.May I also concur with you on your views regarding oil prices but with all due respect, I think commodity and equity may only serves as back-up in case the other plans fail...am I right? Keep commenting...
Your distant brother
Read it all on Facebook
Nik Zafri says :SEE...I TOLD YOU SO!!!
Dubai's $10B bailout by Abu Dhabi calms fears
AP - Two men talk to each other as they look to the Gate building, center, of the Dubai International ...
Abu Dhabi feeds Dubai $10 billion to cover debt on deadline, calming financial worries for now - By Adam Schreck, AP Business Writer - On 2:22 pm EST, Monday December 14, 2009
DUBAI, United Arab Emirates (AP) -- Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring while sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown's star companies.
The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts.
Investors cheered Monday's news. Dubai's main index shot up 10.4 percent at the close and markets elsewhere rose modestly.
Prior to the crisis, most investors had assumed the Dubai government itself, possibly with Abu Dhabi's help, would guarantee debts amassed by its chief growth engine.
Dubai authorities are scrambling to reshape the business hub's battered image, vowing that the city-state is committed to "transparency, good governance and market principles." Officials outlined a new legal framework that promised to increase openness and protect creditors in future dealings with the conglomerate, offering lenders succor in a country where formal bankruptcy proceedings are largely untested.
"We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheik Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee, said in a statement.
Some $4.1 billion of the funds released Monday will go toward meeting a deadline to repay Islamic bonds issued by Dubai World's Nakheel property arm. The conglomerate, whose sprawling holdings range from the oceanliner Queen Elizabeth 2 to luxury retailer Barney's New York, will use the rest.
The move, however, carries broader implications as UAE officials have looked to assure the market the country's economy was on solid ground. Their assurances gave voice to a silent concern that the whole country would be hit by the same investor mistrust that Dubai now faces.
The bailout bought Dubai, itself saddled with more than $80 billion in debts including Dubai World's, time it desperately needs.
"This is a very significant development," said Marios Maratheftis, head of regional research at Standard Chartered Bank. "It shows once again there is a one-country approach in dealing with the crisis, which is positive."
But it was unclear if the news -- assurances and funding alike -- would prove to be more than a temporary salve.
Standard & Poor's, which along with other credit rating agencies has aggressively cut its outlook on Dubai state-run companies, called Monday's move "a step towards rebuilding confidence." But it warned that the government's ability to bail out other firms remains uncertain.
Fitch Ratings, another credit agency, also urged caution, saying Abu Dhabi's bailout was "tactical in nature as opposed to a reversal of recent rhetoric regarding state support."
Abu Dhabi, which controls the UAE's presidency, has directly and indirectly provided Dubai with $25 billion over the past year, mostly by buying Dubai bonds. In all, Dubai's known debts are roughly equal to its total economic output last year. The full extent of its liabilities is uncertain, however, with some analysts putting the total at $100 billion or more.
The aid package is key for Dubai, which despite its international celebrity has little of the oil wealth held by Abu Dhabi. Dubai's ruler is the UAE's vice president and prime minister.
Dubai created Dubai World -- which has interests in seaports, real estate, tourism and retail -- to diversify its economy and boost its international clout. Much of the growth was fueled by easy credit. As the bills came due, the emirate struggled to repay as its economy was battered by the global economic downturn.
Nakheel, a property developer and hotel operator best known for building manmade islands in the shape of palm trees and a map of the world off Dubai's coast, was among those Dubai World companies that relied heavily on that easy money.
Plenty of questions remain, especially as Dubai works to salvage its reputation and the conglomerate tries to deal with the rest of its debts.
Dubai World, while welcoming the financial support, said it was nonetheless pushing ahead with talks to convince lenders to agree to a "standstill" -- effectively a delay -- on repaying part of its debt.
"This announcement constitutes a specific bailout of Nakheel, suggesting that as an entity (it) was deemed to be 'too big to fail,'" said Fahd Iqbal, a Dubai-based analyst at Middle East investment bank EFG-Hermes. "It does not, however, constitute a bailout of Dubai Inc. or Dubai World as a whole and this is important to highlight."
Officials introduced a reorganization law that could be used in case Dubai World is "unable to achieve an acceptable restructuring of its remaining obligations."
A person close to the Dubai government said the new law provided a legal framework for addressing corporate debt, though it did not mean a bankruptcy filing by state-owned companies was certain.
"The current bankruptcy law is untested," the person said, insisting on anonymity as a condition for briefing reporters on a conference call. "Dubai World needed a legal process to go through. The government was very focused on creating something that would be fair and transparent to everybody."
It was not immediately clear what, if anything, Abu Dhabi would expect in exchange for Monday's funding. Analysts had said an Abu Dhabi bailout could result in it exerting greater influence on its high profile neighbor going forward.
But the individual close to the Dubai government said the money came with no strings attached.
"Let me be clear: Dubai has not given anything up. There have been no conditions on the funding," he said.