A year-end rally in Dubai-related bonds sends a positive signal for 2012, suggesting more investors are becoming convinced the emirate can arrange smooth refinancings for state-owned firms next year. But there are still major doubts.
Government-related entities in Dubai have bonds worth $3.8 billion maturing in 2012. With the real estate market still sagging, the stock market moribund and many banks reluctant to lend because of global financial instability, investors have worried that some of those bonds might be restructured, with changes to repayment terms that disadvantage creditors.
Such speculation prompted Sheikh Ahmed bin Saeed al-Maktoum, chairman of the Dubai Supreme Fiscal Committee, to declare on December 7 that restructuring was not on the cards, though he said the government might look into refinancing part of the debts, presumably through issuing new bonds or loans.
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