Dubai Able to Tap Loans to Repay Debt This Year, StanChart Says
Dubai’s state-owned companies should be able to raise new loans to help repay about $10 billion of debt due this year, the head of Standard Chartered Plc’s (STAN) unit in the United Arab Emirates said.
The issue of government-related entities “debt remain and they still have to be worked through,” Jonathan Morris, the bank’s chief executive officer for the U.A.E. told a news conference in Dubai today. “We think the government is doing all the right things and exploring all options” and “I don’t see why” they won’t be able to roll over their debt, he said.
Investors have been concerned about the ability of DIFC Investments LLC, an owner of properties in Dubai’s financial center, to repay a $1.25 billion Islamic bond due in June as well as that of business park operator Jebel Ali Free Zone FZE, which must pay a 7.5 billion-dirham bond ($2 billion) in November. Dubai’s state-related companies have about $10.3 billion of debt maturing this year, Bank of America Corp. Merrill Lynch estimated in October.
State-linked companies in the emirate, which teetered on the brink of default in 2009, don’t need to raise money from international bond markets in 2012 and has “no intention” of seeking support from Abu Dhabi, Mohammed Al Shaibani, director general of the Dubai ruler’s court, said in an interview last month. Abu Dhabi gave $20 billion to its neighbor in 2009 to help restructure debt.
DIFC Investments started talks with banks for a loan of as much as $1 billion to help repay the sukuk, two bankers with knowledge of the plan said on March 14. Jebel Ali Free Zone hired Citigroup Inc. to find a buyer for its U.K warehouse unit Gazeley Ltd., a person familiar with the deal said Feb. 27. The company also started talks with banks for a loan to help pay half of its Islamic notes, two people familiar with the matter said Feb. 7.
“We are very confident about the U.A.E. economy, although we would be concerned if there was a headline event which hit confidence,” Morris said. “Certainly where we sit at the moment we are comfortable that the government is doing all the right things and broadly we are pretty optimistic about this year.”
Standard Chartered’s consumer banking business has rebounded from the credit crisis and non-performing loans in retail banking are at the pre-crisis levels, Morris said.
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