Dubai's finance chief yesterday stressed the difference between government support and guarantees, as leading banks warned the emirate might face bigger liabilities than previously thought.
Abdulrahman al Saleh, the director general of the Department of Finance, also suggested it might take longer than six months to complete the debt restructuring at Dubai World, which is seeking to reschedule about US$26 billion (Dh95.5bn) in loans.
"The six-months period will be short for a complete restructuring," Mr al Saleh told Al Arabiya TV. "The focus at this stage will be on the borrowers and contractors."
It was not what markets wanted to hear as the Dubai Financial Market General Index fell 6.1 per cent, erasing most of this year's gains and leaving investors uncertain about the full extent of the emirate's debt burden.
"It is difficult to overemphasise the need for a timely resolution of Dubai World's debt problems. A protracted negotiation process that leaves creditors with a significant loss would not be in the emirate's best interest," Morgan Stanley analysts Mohamed Jaber and Paolo Batori wrote in an investor note.
Dubai shook global stock markets two weeks ago when it asked for a debt standstill for at least six months. The most imminent payment involves Nakheel, the developer of the emirate's palm-shaped islands.
It is due to make a $4bn sukuk repayment on Monday and has a payment grace period until December 28 to settle the debt.
As deadline day approaches for Nakheel, investor attention is moving beyond the developer and its indebted parent to focus on other Dubai Government-related entities that may also need to restructure their debts.
Debt restructuring by state-run companies could almost double to $46.7bn, Morgan Stanley said yesterday. UBS also said Dubai's state-run companies would have to repay the equivalent of about 43 per cent of the emirate's GDP within the next two years.
Saud Masud, an analyst at UBS, said: "We may witness the most visible stress test for Dubai corporations entailing both legal and financial regulatory frameworks and the resulting implications for investor confidence in the long run."
The Government-controlled Dubai World said last week that it is in talks to renegotiate debt repayments mostly accrued at Nakheel and Limitless, its two property developers. That forms part of an overall $59bn in liabilities.
"We believe for any emirate, state or country, addressing debt repayments totalling approximately 43 per cent of GDP in a period of 24 months may potentially pose significant challenges, especially in the economic down cycle," Mr Masud said.
Ratings agencies that measure the creditworthiness of corporations and governments have also increased their scrutiny of Dubai companies. Moody's Investors Service yesterday downgraded six key state-owned companies, making it more expensive for them to raise funds in the future. DP World, the country's flagship conglomerate which owns ports around the globe, and the Dubai Electricity and Water Authority (DEWA), the emirate's main utility company, were pushed into junk territory by the ratings company.
Moody's also lowered by several notches the issuer and debt ratings of Emaar Properties, DIFC Investments, Jebel Ali Free Zone and Dubai Holding Commercial Operations Group. All six companies remain on review for further downgrades.
Citibank said the Dubai Government would struggle to meet the debt repayments of the companies it owns if it were asked to do so. It calculated that interest expenses could account for about a third of government spending by 2011.
Investors and ratings agencies are becoming increasingly concerned that the emirate will not extend financial support for debts accumulated by government-related entities that do not have explicit government guarantees. That distinction was once again highlighted in Mr al Saleh's remarks to Al Arabiya.
"We would like to emphasise the difference between support and guarantees," he said. "It was clear since the company's establishment that it's not guaranteed."
Moody's lowered its ratings yesterday for this reason, said Philipp Lotter, the senior vice president for GCC corporates at the ratings agency.
"Taking into account the government's most recent position, Moody's no longer believes it appropriate to assume timely support that results in any uplift for the ratings of four of the government-related entities," he said.
However, Moody's still assumes "limited but sufficient" support for DEWA and DIFC due to their strategic importance to Dubai. Before Dubai World's debt restructuring, many investors as well as ratings agencies assumed implicit support by the government. Now that such support is no longer being taken for granted, banks are assessing the potential for further restructuring elsewhere within the web of Dubai companies.
"It's likely that other government-related entities will announce debt restructuring plans over the near term," Morgan Stanley said in its report.
The bank singled out several companies owned by the Dubai Government that may need to restructure their debt urgently.
Some analysts now argue that the emirate's total funding needs may actually be far greater than Dubai's estimated overall debt of $84bn. That includes state-owned companies.
Mr Masud said the emirate's "total systemic leverage" stood at $117bn, including the cost to developers to complete unfinished properties should investors default on payments.
On Monday, creditors gathered in Dubai for their first formal meeting with Dubai World.
While the investors have not yet publicly stated their intentions, Nakheel's options range from full repayment, returning some money at a discount, asking creditors to roll the debt over into a new bond or, in the worst-case scenario, defaulting.
uharnischfeger@thenational.ae
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
The 12
England
Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, Tottenham Hotspur
Italy
AC Milan, Inter Milan, Juventus
Spain
Atletico Madrid, Barcelona, Real Madrid
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
Coming soon
Torno Subito by Massimo Bottura
When the W Dubai – The Palm hotel opens at the end of this year, one of the highlights will be Massimo Bottura’s new restaurant, Torno Subito, which promises “to take guests on a journey back to 1960s Italy”. It is the three Michelinstarred chef’s first venture in Dubai and should be every bit as ambitious as you would expect from the man whose restaurant in Italy, Osteria Francescana, was crowned number one in this year’s list of the World’s 50 Best Restaurants.
Akira Back Dubai
Another exciting opening at the W Dubai – The Palm hotel is South Korean chef Akira Back’s new restaurant, which will continue to showcase some of the finest Asian food in the world. Back, whose Seoul restaurant, Dosa, won a Michelin star last year, describes his menu as, “an innovative Japanese cuisine prepared with a Korean accent”.
Dinner by Heston Blumenthal
The highly experimental chef, whose dishes are as much about spectacle as taste, opens his first restaurant in Dubai next year. Housed at The Royal Atlantis Resort & Residences, Dinner by Heston Blumenthal will feature contemporary twists on recipes that date back to the 1300s, including goats’ milk cheesecake. Always remember with a Blumenthal dish: nothing is quite as it seems.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
UAE currency: the story behind the money in your pockets
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
RESULT
Shabab Al Ahli Dubai 0 Al Ain 6
Al Ain: Caio (5', 73'), El Shahat (10'), Berg (65'), Khalil (83'), Al Ahbabi (90' 2)
What is Folia?
Prince Khaled bin Alwaleed bin Talal's new plant-based menu will launch at Four Seasons hotels in Dubai this November. A desire to cater to people looking for clean, healthy meals beyond green salad is what inspired Prince Khaled and American celebrity chef Matthew Kenney to create Folia. The word means "from the leaves" in Latin, and the exclusive menu offers fine plant-based cuisine across Four Seasons properties in Los Angeles, Bahrain and, soon, Dubai.
Kenney specialises in vegan cuisine and is the founder of Plant Food Wine and 20 other restaurants worldwide. "I’ve always appreciated Matthew’s work," says the Saudi royal. "He has a singular culinary talent and his approach to plant-based dining is prescient and unrivalled. I was a fan of his long before we established our professional relationship."
Folia first launched at The Four Seasons Hotel Los Angeles at Beverly Hills in July 2018. It is available at the poolside Cabana Restaurant and for in-room dining across the property, as well as in its private event space. The food is vibrant and colourful, full of fresh dishes such as the hearts of palm ceviche with California fruit, vegetables and edible flowers; green hearb tacos filled with roasted squash and king oyster barbacoa; and a savoury coconut cream pie with macadamia crust.
In March 2019, the Folia menu reached Gulf shores, as it was introduced at the Four Seasons Hotel Bahrain Bay, where it is served at the Bay View Lounge. Next, on Tuesday, November 1 – also known as World Vegan Day – it will come to the UAE, to the Four Seasons Resort Dubai at Jumeirah Beach and the Four Seasons DIFC, both properties Prince Khaled has spent "considerable time at and love".
There are also plans to take Folia to several more locations throughout the Middle East and Europe.
While health-conscious diners will be attracted to the concept, Prince Khaled is careful to stress Folia is "not meant for a specific subset of customers. It is meant for everyone who wants a culinary experience without the negative impact that eating out so often comes with."
Winners
Best Men's Player of the Year: Kylian Mbappe (PSG)
Maradona Award for Best Goal Scorer of the Year: Robert Lewandowski (Bayern Munich)
TikTok Fans’ Player of the Year: Robert Lewandowski
Top Goal Scorer of All Time: Cristiano Ronaldo (Manchester United)
Best Women's Player of the Year: Alexia Putellas (Barcelona)
Best Men's Club of the Year: Chelsea
Best Women's Club of the Year: Barcelona
Best Defender of the Year: Leonardo Bonucci (Juventus/Italy)
Best Goalkeeper of the Year: Gianluigi Donnarumma (PSG/Italy)
Best Coach of the Year: Roberto Mancini (Italy)
Best National Team of the Year: Italy
Best Agent of the Year: Federico Pastorello
Best Sporting Director of the Year: Txiki Begiristain (Manchester City)
Player Career Award: Ronaldinho
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
The Two Popes
Director: Fernando Meirelles
Stars: Anthony Hopkins, Jonathan Pryce
Four out of five stars
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
RESULT
Liverpool 4 Southampton 0
Jota (2', 32')
Thiago (37')
Van Dijk (52')
Man of the match: Diogo Jota (Liverpool)