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Abu Dhabi bails out Dubai with $10 billion
December 14, 2009 | Global
Dubai has received $10 billion from its ultra rich neighbour Abu Dhabi to help the ailing state-owned Dubai World group repay its $4.1 billion Islamic debt which matures today.
A statement from the Dubai government said the extra $6 billion would be used to cater to the needs of Dubai World until the end of April 2010.
“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,” Sheikh Ahmed bin Saaed al-Maktoum, the chairman of the Dubai Supreme Fiscal Committee said in a statement.
“Dubai is, and will continue to be, a strong and vibrant global financial center. Our best days are yet to come. ”
Nakheel, Dubai World’s property arm said it would meet its Islamic bond obligations – ’sukuk’ – within the next 14 days.
The United Arab Emirates central bank would also inject liquidity as needed into banks that face exposure to Dubai World a source close to the Dubai government told Reuters
World markets were devastated last month when Dubai revealed that it had asked creditors to restructure almost half its $59 billion (£36 billion) total liabilities, adding that it planned a six-month suspension of all debt repayments. The announcement sparked panic in stock markets around the world as nervous investors worried about a second wave of financial collapses.
In its statement today, Dubai said it would focus on addressing the concerns of Dubai World’s creditors and will start discussions with creditors and contractors shortly.
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