Dubai Has Overcome Its Financial Challenges: Sheikh Ahmed
Dubai, the second-biggest emirate in the United Arab Emirates, has overcome its financial challenges and could issue debt if it wanted, said the head of Dubai’s Supreme Fiscal Policy Committee.
Dubai and Emirates Airlines are always seeking opportunities to sell debt, though there is no urgency to do so and much depends on “if it’s a good time or not,” Sheikh Ahmed bin Saeed Al Maktoum told reporters at the World Economic Forum in Dubai today.
“I believe we proved to the market that we overcame the problem,” he said. “It’s very small when compared to other countries. And we see in the last couple of years that there’s growth in the tourism, aviation sector and banking sector.”
Dubai, which borrowed $20 billion from the central bank, the Abu Dhabi government and its lenders in 2009 to avoid a default, isn’t concerned about refinancing outstanding debt, Sheikh Ahmed said. Asked about re-capitalizing the Dubai financial support fund, he said: “No, we don’t need to do anything like that. All the companies are doing well.”
Dubai’s credit risk receded this year as many state-linked companies repaid and restructured debt.
“This is great news, but the market has also realized that and that’s one of the reasons the stock market is up since the beginning of the year,” Haissam Arabi, chief executive officer of Dubai-based hedge fund Gulfmena Investments Ltd., said by telephone today. “This comes as an additional confirmation to what investors have come to terms with.”
Dubai’s benchmark DFM General Index has gained 20 percent this year. The emirate’s credit risk has plunged 205 basis points, or 2.05 percentage points, this year to 240, says data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Economic growth in the emirate, one of seven in the U.A.E., will accelerate to 5 percent this year from 3 percent in 2011, according to government forecasts.