"Creditors need to take part of the responsibility for their decision to lend to the companies," said Abdulrahman al-Saleh, director general of Dubai’s department of finance. "They think Dubai World is part of the government, which is not correct."
United Arab Emirates stocks plunged on Monday as investors waited for clarity on Dubai’s request for a six-month delay on repaying billions of dollars in debt issued by Dubai World and its Nakheel unit, developer of three palm tree-shaped islands.
"The government is the owner of the company, but since its foundation it was established that the company is not guaranteed by the government," Saleh explained on Dubai Television.
"It deals with all parties on this basis and it borrows based on ... its projects and not the guarantee of the government," he said.
Saleh said market reaction to last Wednesday’s announcement by Dubai World, which initially shook global financial confidence, was exaggerated.
"The restructuring is a wise decision that is in the interest of all parties in the long term but might bother creditors in the short term," he declared.
The standstill agreement would affect about $5,7 billion of debt due to mature before the end of May.
The UAE central bank has promised additional liquidity to local banks, but Saleh said he doubted it would be required.
"I think banks are not at a stage where they need any extra liquidity from the central bank," he said.
Dubai World is one of the emirate’s three big holding firms, along with Dubai Holding and Investment Corporation of Dubai.
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