Healthy demand for Dubai’s first sovereign bond issue in nearly a year shows how pleased investors are by the emirate’s strategy of scrupulously honoring its public debt obligations while playing hardball in restructuring bank loans.
Dubbed “burn the banks, bail out the bond holders” by investment bank Exotix, the strategy seems to involve doing what it takes to ensure bond maturities of government-related enterprises are repaid on time. In February a unit of Dubai Holding, owned by the emirate’s ruler, said it was using internal cash flow to fully repay a maturing $500 million sukuk.
At the same time Dubai is becoming increasingly forceful in pressing banks to restructure syndicated loans. This month Dubai Drydocks World began using a special tribunal, created under a decree by Dubai’s ruler, to force creditors to sign up to its $2.2 billion debt plan.
No comments:
Post a Comment