Extension set for five years with interest rate of 1 per cent
Abu Dhabi and the Central Bank of the UAE have agreed to refinance $20bn of debt lent to Dubai during the financial crisis and due to mature this year.
According to the state news agency WAMs website, the $10bn loan will be refinanced and an agreement for the re-discounting of $10bn-worth of bonds issued by the Dubai government has also been signed.
The debt has been extended by a further five years with an option to renew and will carry a fixed rate of one per cent throughout the entire tenor of the debt. This is an improvement on the four per cent charged on the original debt.
The financing was extended to Dubai in 2009 when the emirate was hit by the global financial crisis and its property market crashed. The rollover of the debt was widely anticipated by the financial markets and is seen as a sign of strengthening Abu Dhabi and Dubai relations.
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