UAE takes action to allay investors fears

| December 1, 2009 | 0 Comments
UAE takes action to allay investors fears

Shares in Dubai continued their decline today following the country’s debt crisis after the stock market closed 5.61% down. Abu Dhabi lost 3.57%, while Qatar’s main index closed down 8.27%.

However, in a bid to calm investors fears, the president of the United Arab Emirates has attempted to reassure them by issuing a statement saying that region’s economy was in good condition.

Last week, it emerged last week that state-owned company Dubai World (Dubai’s highest-profile company) wanted a six-month holiday from its debt repayments. The state-owned conglomerate owes $59 billion of the country’s entire $80 billion debt mountain.

As the facts of Dubai’s debt crisis unravelled, shares across the world plunged but over the weekend, the United Arab Emirates (UAE) Central Bank stepped in by providing an emergency liquidity facility for local lenders.

However, Dubai’s Government distanced itself from the problems at Dubai World saying it would not guarantee the company’s debt.

London’s FTSE, in particular, fell as the crisis emerged since UK banks have lent over an £30 billion to the United Arab Emirates as a whole - the majority of which went to Dubai.

However, Dubai World is now planning a restructure which will see the sale of assets and according to the company, Moelis & Co has been appointed to advise on the restructuring, working alongside Deloitte and Rothschild.

Hassaim Arabi, chief executive at Gulfmena Alternative Investments described the restructuring statement as good news.

“It shows they are still committed to their payments and it removes all fears that this is a complete default,” he said.

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