United Arab Emirates government entities may find it “impossible” to lure international funding if Dubai World, the state-owned holding company that’s struggling with $59 billion of debt, doesn’t make a full payment to creditors of its Nakheel PJSC unit, Eurasia Group said.
“We expect Dubai World to offer only partial payment on Dec. 14, demanding an outright haircut on the principal or buying itself some more time by potentially offering an explicit Dubai or U.A.E. government guarantee,” Eurasia associate Hani Sabra wrote in a research note. “This would provide Dubai World more time to sell some of its assets and would restore a degree of confidence.”
State-owned Dubai World is seeking a “standstill” agreement with lenders as it attempts to restructure $26 billion of debt, including property unit Nakheel’s $3.52 billion Islamic bond, which matures Dec. 14. Dubai Holding LLC is most at risk of being “next in line” in restructuring its debt, Barclays Plc said.
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