Agency challenges Dubai’s willingness to support state firms

15 October 2009

Economic crisis weakens Emirate’s financial position

Ratings agency Standard & Poor’s (S&P) has cast doubts on Dubai’s willingness to support several of its government-related firms.

The agency says it is almost certain that Dubai Holding and the Dubai International Financial Centre (DIFC) will receive financial support, but it is less clear about other state companies.

According to S&P, as a result of the emirates’ weakened financial position due to the economic crisis, “providing government support will be more costly and the government may be required to distinguish among potential recipients more than we assumed in prior years.”

S&P expects Nakheel’s $3.5bn sukuk to be repaid when it matures in December, but says that problems may emerge during the next three years when it is estimated that Dubai must repay $50bn debts.

Rather than attempt to pay back its debts, S&P expects several restructurings to occur over the next few years. “We currently expect that certain [Dubai firms] may pursue a strategy or restructuring part of their obligations,” says S&P.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.