The Dubai government announced on Monday that it will utilize a financial instrument worth 10 billion dollars provided by the neighboring emirate of Abu Dhabi to meet urgent financial obligations, including the due 4.1 billion dollar sukuk bond of Dubai World.
"The government of Abu Dhabi has agreed to inject 10 billion dollars into Dubai’s Financial Support Fund, which will serve to cover a range of upcoming obligations of Dubai World," stated the announcement from the fund’s CEO, šeikh Ahmad Bin Saeed Al Maktoum."As the first action of the new fund, the Dubai government has authorized the allocation of 4.1 billion dollars to cover the obligation due today on the sukuk bond," the statement further noted. This pertains to a significant debt of Nakheel, the construction arm of the troubled holding company Dubai World, whose Islamic bond is maturing on Monday.
Dubai World announced on November 25 that it would not be able to meet its obligations and requested a six-month moratorium on debt repayments. In the meantime, it has initiated a restructuring process for approximately 26 billion dollars in debt. The support fund was established this year to assist struggling state-owned companies affected by the collapse of the real estate market and the global economic crisis. It is financed by the central bank of the emirate and Abu Dhabi, Dubai’s oil-rich neighbor. The statement further emphasizes that the central bank of the United Arab Emirates (UAE) is also ready to provide support to local banks. (H)
