Dubai World Debt Accord Is `Credit Positive' for U.A.E Banks, Moody's Says - Bloomberg

Dubai World’s approval from creditors to alter the terms on $24.9 billion of debt is “credit positive” for banks in the United Arab Emirates, according to Moody’s Investors Service.

The debt restructuring accord “puts an end to the uncertainty that the threat of a liquidation had created,” Dubai-based analyst John Tofarides wrote in an e-mailed report today. “Had an agreement not been achieved, the potential liquidation of Dubai World could have seriously increased the impairment costs that banks would have incurred, throwing confidence in the U.A.E. banking system into havoc.”

The state-owned holding company is “well positioned to close the restructuring in the coming weeks” after agreeing with about 99 percent of creditors, Dubai World said on Sept. 10. The agreement also “marks the support of the creditors to the separation,” of real-estate developer Nakheel PJSC from Dubai World, said Sheikh Ahmad Bin Saeed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee.