Dubai World's willingness to sell prized assets such as ports operator DP World to pay down its debt pile is considered such a drastic move that analysts see it more as a last-resort bargaining tactic.
Documents obtained by Reuters this week revealed the surprising news that the debt-laden conglomerate was willing to let go of "strategic assets" such as DP World, Jebel Ali Free Zone and Dubai Maritime City (DMC) as part of a $19.4-billion fundraising effort as it tries to reach a restructuring deal with creditors by October 1.
By displaying its willingness to put these assets on the block, Dubai World is effectively offering creditors an insurance policy that if the restructuring plan runs into trouble, it will sell core, strategic assets.
Thursday, 26 August 2010
Nakheel Trade Sukuk Fair Value Is Estimated in Low 60 Cents, JPMorgan Says - Bloomberg
Nakheel PJSC’s proposed sukuk to settle trade creditor claims is estimated to have a fair value in the low 60 cents to the dollar, JPMorgan Chase & Co. said.
The property company, controlled by state-owned Dubai World, will be able to make almost all coupon payments on the five-year Islamic bonds although “we are less confident about Nakheel’s ability to redeem the principal in 2015,” JPMorgan analyst Zafar Nazim wrote in a research note e-mailed today. Nakheel will face the risk of running out of cash in 2015 unless it starts new developments and sell land in three to five years, the report said.
Nakheel, which is building palm tree-shaped islands off Dubai’s coast, said on July 14 a group of its creditors unanimously supported a plan on altering the terms on $10.5 billion of loans and unpaid bills. The company expects to pay 40 percent of the money owed to trade creditors in cash and 60 percent through a tradeable sukuk, it said.
The property company, controlled by state-owned Dubai World, will be able to make almost all coupon payments on the five-year Islamic bonds although “we are less confident about Nakheel’s ability to redeem the principal in 2015,” JPMorgan analyst Zafar Nazim wrote in a research note e-mailed today. Nakheel will face the risk of running out of cash in 2015 unless it starts new developments and sell land in three to five years, the report said.
Nakheel, which is building palm tree-shaped islands off Dubai’s coast, said on July 14 a group of its creditors unanimously supported a plan on altering the terms on $10.5 billion of loans and unpaid bills. The company expects to pay 40 percent of the money owed to trade creditors in cash and 60 percent through a tradeable sukuk, it said.
Dubai Can Cut Costs 30% After Spending Like `Arabian House,' Khalfan Says - Bloomberg
Dubai’s Chief of Police and head of the budget committee Dahi Khalfan said the emirate can cut spending by 30 percent, five months after it pledged to save $1 billion this year in government expenses.
“We have been extremely spoilt,” Khalfan said late yesterday in an interview. “In our budget we spend like an Arabian house, with all its generous hospitality.”
Dubai in March ordered government departments to curb spending this year to reduce the size of the emirate’s expected 6 billion dirham ($1.6 billion) budget deficit. Departments were told to reduce spending by 15 percent to save about $1 billion. Further savings could be made in “construction, events and activities, travel costs, hospitality and official missions outside the country,” Khalfan said.
“We have been extremely spoilt,” Khalfan said late yesterday in an interview. “In our budget we spend like an Arabian house, with all its generous hospitality.”
Dubai in March ordered government departments to curb spending this year to reduce the size of the emirate’s expected 6 billion dirham ($1.6 billion) budget deficit. Departments were told to reduce spending by 15 percent to save about $1 billion. Further savings could be made in “construction, events and activities, travel costs, hospitality and official missions outside the country,” Khalfan said.
Dubai Shares Rise Most in a Week on Dubai World Debt Optimism, Asset Sales - Bloomberg
Dubai shares rose the most in more than a week on optimism Dubai World is closer to resolving its debt restructuring after the state-owned holding company said it may raise as much as $19.4 billion by selling assets.
Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, advanced the most in more than a month. Emirates NBD, the United Arab Emirates largest bank by assets, rose 1.2 percent. The DFM General Index climbed 0.9 percent, the most since Aug. 17, to 1,497.47 at the 2 p.m. close in Dubai, bringing the weekly gain to 0.4 percent. The Bloomberg GCC 200 Index increased 0.1 percent.
“News regarding Dubai World is being taken well by local investors and they are piling in to make a quick turn,” said Dubai-based Julian Bruce, director of equity sales at EFG-Hermes Holding SAE. “The reports are an indication of progress.”
Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, advanced the most in more than a month. Emirates NBD, the United Arab Emirates largest bank by assets, rose 1.2 percent. The DFM General Index climbed 0.9 percent, the most since Aug. 17, to 1,497.47 at the 2 p.m. close in Dubai, bringing the weekly gain to 0.4 percent. The Bloomberg GCC 200 Index increased 0.1 percent.
“News regarding Dubai World is being taken well by local investors and they are piling in to make a quick turn,” said Dubai-based Julian Bruce, director of equity sales at EFG-Hermes Holding SAE. “The reports are an indication of progress.”
Union Properties Agrees to Sell Dubai Ritz-Carlton Hotel at Lowered Price - Bloomberg
Union Properties PJSC agreed to sell the Ritz-Carlton hotel development in Dubai for less than the asking price of 1.5 billion dirhams ($410 million), Chairman Khalid bin Kalban said.
Dubai’s third-biggest developer by market value plans to sign the sale agreement in the next ten days, bin Kalban said by phone today. He declined to identify the buyer of the hotel, located within the Dubai International Financial Center, or disclose terms of the deal until the contract is signed.
“Everything has been agreed, all that remains is the drafting of contracts,” bin Kalban said.
Dubai’s third-biggest developer by market value plans to sign the sale agreement in the next ten days, bin Kalban said by phone today. He declined to identify the buyer of the hotel, located within the Dubai International Financial Center, or disclose terms of the deal until the contract is signed.
“Everything has been agreed, all that remains is the drafting of contracts,” bin Kalban said.
Qatar Exchange Drafts Rules to Start Trading in Bonds, CEO Andre Went Says - Bloomberg
The Qatar Exchange, the Persian Gulf country’s equity market, must draft new listing rules before trading in bonds and Islamic debt can begin, according to Andre Went, the bourse’s chief executive officer .
“We are drafting new rules for the bonds,” Went told a seminar in the Qatari capital of Doha late yesterday. The rules would relate to information disclosure and the size of the bonds by issuers, he said.
Went declined to say when bond or sukuk trading will begin. In February, he said that bond trading may begin before the September introduction of the NYSE Euronext Universal Trading Platform, called UTP.
“We are drafting new rules for the bonds,” Went told a seminar in the Qatari capital of Doha late yesterday. The rules would relate to information disclosure and the size of the bonds by issuers, he said.
Went declined to say when bond or sukuk trading will begin. In February, he said that bond trading may begin before the September introduction of the NYSE Euronext Universal Trading Platform, called UTP.
GCC Market Analytics: UPDATE - Saudi Tadawul Index: Watch Out Below?
In a previous post I highlighted how the price level of the Saudi Tadawul Index was sitting rather precariously on a long-term support trend line.
Well, a few weeks have past so I thought I'd take another look to see what's happened:
As you can see, the Index price level has recently broken below the support level. Does this mean Saudi stock prices are heading lower? As I mentioned in the last post, I don't place too much emphasis on this type of analysis. However, I know there are many traders and market analysts out there that do and they'll being interpreting this situation as distinctly bearish.
It's interesting to note that in the most recent Weekly GCC Trend Analysis report the outlook for the Saudi Tadawul Index was very bearish with the short, medium and long-term trends all pointing down. Perhaps the confluence of this and the trend line break above do suggest tough times ahead for Saudi stocks. Something to keep in mind anyway.
Well, a few weeks have past so I thought I'd take another look to see what's happened:
As you can see, the Index price level has recently broken below the support level. Does this mean Saudi stock prices are heading lower? As I mentioned in the last post, I don't place too much emphasis on this type of analysis. However, I know there are many traders and market analysts out there that do and they'll being interpreting this situation as distinctly bearish.
It's interesting to note that in the most recent Weekly GCC Trend Analysis report the outlook for the Saudi Tadawul Index was very bearish with the short, medium and long-term trends all pointing down. Perhaps the confluence of this and the trend line break above do suggest tough times ahead for Saudi stocks. Something to keep in mind anyway.
Alliance Medical Board Said to Agree to Begin Sale of Dubai-Owned Company - Bloomberg
Alliance Medical Ltd.’s board has agreed to sell the company to help repay debt following a demand by the senior lenders of the U.K.-based medical imaging company, a person with knowledge of its restructuring said.
Alliance Medical’s adviser, Blackstone Group LP, has begun contacting potentially interested parties, the person said, declining to be identified because the information is private. Senior lenders of Alliance Medical will simultaneously begin work on an alternative debt-restructuring proposal to the one suggested by Alliance’s owner, Dubai International Capital LLC, and junior mezzanine lenders on July 15, the person said.
Spokesmen for Dubai International Capital and Alliance Medical, based in Warwick, England, declined to comment. A call to Blackstone’s office in London wasn’t answered.
Alliance Medical’s adviser, Blackstone Group LP, has begun contacting potentially interested parties, the person said, declining to be identified because the information is private. Senior lenders of Alliance Medical will simultaneously begin work on an alternative debt-restructuring proposal to the one suggested by Alliance’s owner, Dubai International Capital LLC, and junior mezzanine lenders on July 15, the person said.
Spokesmen for Dubai International Capital and Alliance Medical, based in Warwick, England, declined to comment. A call to Blackstone’s office in London wasn’t answered.