Dubai World To Offer Bks 60% Of Debt In 7-Yrs-Sources

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Dubai World may offer creditors 60 cents on the U.S. dollar guaranteed by the sheikdom's government as part of a deal to reschedule $22 billion of debt, two people familiar with the matter told Zawya Dow Jones.

Under the terms of the deal, banks including HSBC Holding PLC (HBC), Royal Bank of Scotland Group PLC (RBS), Standard Chartered PLC (STAN.LN) and Abu Dhabi Commercial Bank (ADCB.AD), will receive 60% of the money they're owed by the troubled conglomerate after seven years, the persons said.

The offer, which pays no interest, will come with a sovereign guarantee. An alternative offer involves creditors receiving full payment, including 40% of their Dubai World debt in the form of assets in Nakheel, the company's property unit, with no government guarantee over the same seven-year period, the persons, who declined to be identified because of confidentiality agreements, said.

A spokesman for Dubai World declined to comment on the terms of the offer, which is still to be made, when called by Zawya Dow Jones. Ahmed Al Shaikh, a spokesman for Dubai government, didn't answer calls. "There will be two offers on the table by the end of April," one banker, who is familiar with negotiations, told Zawya Dow Jones.

The cost of insuring Dubai's sovereign debt against default rose to its highest level since November Friday as concerns resurfaced over the emirate's large debt and a delay in presenting a deal to Dubai World creditors.

Dubai's five-year credit-default-swap spread--a key measure of credit risk--rocketed close to 50 basis points Friday to trade up at 632 basis points in late trading, according to CMA DataVision.

The emirate is struggling to deal with debts estimated to exceed $80 billion that helped it build infrastructure and rise to become a global city during the boom of the last decade. In November, Dubai World shocked international investors when it asked for a six-month standstill agreement to enable it to restructure $26 billion of debt.

Dubai shares gave up early gains to trade down 0.7% at 1665.33 points Sunday morning after Zawya Dow Jones revealed terms of the proposed Dubai World debt deal. Worries over the company's debt repayment plans sparked a selloff after initial gains in the market, said one trader at Shuaa Securities.END