Plans will not receive approval to proceed until Dubai government issues second $10bn bond
State-owned companies in Dubai have put their restructuring plans on hold while they wait for approval from the Dubai Financial Support Fund.
The fund, the government body that is overseeing the distribution of financial assistance to indebted state-owned enterprises, will wait until Dubai issues its second $10bn bond before it approves any of the plans, according to advisers working on the restructuring of the companies and their debts.
“We have had restructuring plans prepared for the past month but, without approval or funding from the Department of Finance, there is only a limited amount of work we can do to put them in place,” says one source close to Dubai World, the holding company for several of Dubai’s largest state-owned enterprises.
The companies’ financial advisers are continuing to talk to major creditors in the hope that the fund approves their restructuring plans.
The government set up the Dubai Financial Support Fund to disburse the $20bn that the emirate is raising through its two-stage bond programme. The Central Bank of the UAE bought the first $10bn bond in February this year (MEED 2:10:09).
Mohamed al-Abbar, chairman of property group Emaar Properties and head of the government committee responsible for evaluating the impact of the financial crisis on Dubai, said in an interview with US broadcaster CNN on 9 October that Dubai was likely to issue the second tranche of the bond in October or November.
One source close to the Dubai Financial Support Fund says he also expects the second bond to be issued in late October. “There is not much of the first $10bn left,” he adds.