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Investors rattled by Dubai debt

Top corporates struggle with payment

Nov 26, 2009 9:48 PM | By REUTERS and STAFF REPORTER

European banks were hit by concerns about their exposure to debt in Dubai yesterday, and companies in which Middle East investors own big stakes also came under pressure.

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Dubai, where extravagant building projects have been largely put on hold since the start of the global financial crisis, said on Wednesday that it would ask creditors of its flagship companies, Dubai World and property developer Nakheel, to agree to a delay in the repayment of billions of dollars of debt.

State-owned Dubai World's investment arm, Istithmar World, is a part-owner of Cape Town prime spot, the V&A Waterfront.

Istithmar World took a stake in the V&A Waterfront three years ago, along with London and Regional Properties, and South African BEE investors. It paid Transnet $1-billion and announced plans to spend another $1-billion on another development at the site.

Bloomberg reported in September that Istithmar might face liquidation after a decade-long, $27-billion spending spree that had been financed largely with borrowed money.

It quoted an anonymous source as saying Dubai World was in talks with creditor banks to restructure at least $12-billion in debt, and that Istithmar or its assets might be sold to help its parent repay the debt.

Companies with significant Middle East shareholders, such as the London Stock Exchange, were also hit by concern that holdings in them could be cut to meet obligations at home.

"The worry is about the exposure of the banks, given the rapid pace of expansion in Dubai and around the area in the last few years," said a bank analyst who asked not to be named.

Dubai said on Wednesday that the delayed repayment of debt was a first step in restructuring Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.

The news has sent the cost of insuring Dubai's debt against default soaring and bond prices tumbling. State-run Dubai World has $59-billion in liabilities.

"This was a surprise to all bankers, and probably to the management of DW, because banks had been progressing well with refinancing discussions," a senior loans banker active in the Gulf said yesterday.

Shares in the LSE dropped as much as 8.8%, on worries that 22% shareholder Borsa Dubai might sell some of its stake.

"Everything that is in Arabian hands is getting sold at the moment," said one trader.

The US market was closed for the Thanksgiving holiday yesterday.

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Nov 27 2009 06:15:36 AM
steveninthematrix
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debt is money

google 'money is debt'

Nov 27 2009 06:21:38 AM
steveninthematrix
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im going to say this slowly for people to get it,

all central banks are private companies,
the IMF, the Federal Reserve, the Bank of England, and the SARB, are not government run institutions, but PRIVATE companies with private shareholders, and they create the 'money' out of thin air

lets call this money P (principal amount on loans),

then all the loans in the world from the central banks which create money out of thin air (it aint backed by gold and silver and the banks are never auditted), equals P

then P < P+I

P+I, is all the principal amounts in the world + all the interest on them

since P+I > P, it is impossible for everyone to get out of debt, and it then becomes inevitable that a certain percentage of the population defaults on their loans, and bankers seize them....

i.e. the international banks who run this scam, take over entire countries, gold mines, farm lands, water, natural resources...

put another way, let the banker in the board-game monopoly charge interest on every transaction, and the game ends when the banker owns all the houses, all the hotels, and all the streets, it is inevitable

Steven

contactable on stevenonearth AT gmail.com
Nov 28 2009 02:48:43 AM
jsavo
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Nov 27 2009 06:21:38 AM
steveninthematrix
___________________________
Well said. Banks have convinced western governments to bail them out of the recent crisis to the tune of billions at the expense of the taxpayer. Typically a bank takes a deposit, issues loans to 10 borrowers at a rate of typically 8 to 9% to, again typically 8 loanees - thats a profit of up to 80%, so long as the scam can continue - in the meantime investment in real projects is neglected ie communities, education and all the stuff the banks dont want to know about, y'know, the feely goody stuff. The b(w)ankers laugh at that. Social capital is yet to be measured. GNP etc.
Anyway the scam crashed lately and governments, instead of putting these f*ckers in jail, bailed them out!
Thats why I get maD. Regulators are paid for pretending to regulate!
Nov 28 2009 03:14:56 AM
jsavo
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loans to 10 borrowers at a rate of typically 8 to 9% to, again typically 8 loanees
----------------------------------------------
sorry, contradiction there forget 10 borrowers
Nov 28 2009 04:17:19 AM
Billy Hill
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Dubai: A Morally Bankrupt Dictatorship Built by Slave Labor


Dubai is finally financially bankrupt - but it has been morally bankrupt all along. The idea that Dubai is an oasis of freedom on the Arabian peninsular is one of the great lies of our time.

Yes, it has Starbucks and Dunkin' Donuts and the Gucci styles, but beneath these accoutrements, there is a dictatorship built by slaves.

[Sheikh Mohammed is just another US supported dictator]

The people who really built the city can be seen in long chain-gangs by the side of the road, or toiling all day at the top of the tallest buildings in the world, in heat that Westerners are told not to stay in for more than 10 minutes. They were conned into coming, and trapped into staying.

In their home country - Bangladesh or the Philippines or India - these workers are told they can earn a fortune in Dubai if they pay a large upfront fee. When they arrive, their passports are taken from them, and they are told their wages are a tenth of the rate they were promised.

They end up working in extremely dangerous conditions for years, just to pay back their initial debt. They are ringed-off in filthy tent-cities outside Dubai, where they sleep in weeping heat, next to open sewage. They have no way to go home. And if they try to strike for better conditions, they are beaten by the police.


Johann Hari - The Independent

http://www.commondreams.org/view/2009/11/27-4
Nov 28 2009 09:54:41 AM
VinceRSA
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Just WAIT, until teh ANC has managed to lay it's grimy dark stump fingered paws onto more BILLIONS of World Bank and other institutes money and then instruct good ol' jolly dust raiser with an AK47 to whirl about denying and refusing to pay back.
NONE of the monies will have eneterd RSA notwithstanding, it will all have been sidled off into private and isalnd accounts in a few royal tribals names!
AFRICA at it's BEST!
VOTE ANC,
VOTELA for tjondolos forever!
Vote for most expensive electricity in the universe!
Vote for many wives equitable to little work and plenty entertainment!
Vote for dark continent of full scale violence and zero conscience!
AMANDLA to the ANC,
Phambile Mugabe and all dictators!
Vote for tickets at R55,000.00 each to watch the tussle for next president between little black jesus juju and ol' Sexwhale MAYBE on his island - while phosa and gwede sit back ready to steal it AND the banks with Vuvisela and nathi and Flloyd.
Nov 28 2009 10:09:31 AM
Billy Hill
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And what is the price of eggs in China today little pink Vincie boy?

Your lunatic rantings mean nothing to anybody.
Nov 28 2009 10:10:05 PM
rascal
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Dubai-Sin City

Dubai had successfully morphed itself into the premier tourism and investment destination of the muslim world.The international community was enticed by the paradise and man- made wonders that is Dubai.Sadly,the paradise that had become so popular was one which was plagued with prostitution and other immoral and un-islamic vices.I sympathise with investors who have lost fortunes as the growth of Dubai was a ''sure bet'' on paper,but the Almighty had to teach this emirate a lesson.


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