The credit rating agency has said that five conglomerates, including Dubai’s financial services zone’s investment arm and the main electricity and water company, will “struggle” to service their vast debt piles by themselves.
In a note S&P said that the five Dubai government-related entities (GREs) it rates are “up against significant risks from the weakening global economic outlook, the Arab Spring, and the volatile equity and bond markets.” The agency added: “These risks have raised concerns as GREs face large debt maturities and refinancing needs in 2012.”
The fears will compound the outlook for global banks, some of which have a high exposure to Dubai debt. The emirate’s total debt load is about $119.8bn (£77.7bn), according to a report by Bank of America Merrill Lynch. Some $15bn needs to be repaid or refinanced in 2012, according to the bank.
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