The credit ratings of seven lenders in Dubai, Sharjah and Ras al Khaimah were downgraded on Thursday by Fitch, as the ratings agency expressed doubts over future UAE support.
The move was triggered by concerns over the ability of the Government and the emirate of Dubai to provide assistance to their banks even though their "willingness" to do so was undiminished.
The downgrade covered Bank of Sharjah, Commercial Bank of Dubai, Dubai Bank, Emirates Bank International, Mashreqbank, National Bank of Ras al Khaimah and Tamweel, the home-finance company.Fitch said the downgrades reflected increasing stress on the Government of Dubai and the Central Bank as they try to finance the restructuring of roughly US$65 billion (Dh238.74bn) in debts owed by Dubai-controlled companies such as Dubai World.
"It's the imminent increase in Dubai Government liabilities and the prospect of further increases being required at a time when Dubai Government revenues are unlikely to be growing and indeed are likely to be under pressure because of the domestic recession," said Richard Fox, the head of sovereign ratings at Fitch in London.
Dubai revealed last November that it had roughly $10bn in sovereign debt, then doubled its debt load in February when it sold $10bn in bonds to the Central Bank.
That money was used to help Dubai Government-controlled companies such as Nakheel pay contractors and creditors in the wake of a sharp economic downturn that saw property prices fall by as much as half since their peak.
The remainder of the funds are now being managed by the Dubai Financial Support Fund, which was created in July to oversee Dubai Inc's restructuring.
When it announced the new fund, Dubai also confirmed plans to sell an additional $10bn in bonds by the end of this year, leaving it with triple the amount of debt it owed at the end of last year.
Some economists have questioned Fitch's concerns over the structures in place to help support local lenders.They say ratings agencies have tended to pay too much attention to clear support structures at the expense of clear actions.
"Ratings agencies always look for a set framework that governs how federal authorities and the Central Bank support banks," said Mahdi Mattar, the chief economist at Shuaa Capital. "We don't have such a framework or any clear procedures here in the UAE, but the government has repeatedly shown its willingness and ability to support its banks. Investors know very well that the Federal Government would not allow any of its commercial banks to fail."
The downgrades also appear to run counter to a resurgence in investor confidence in local debt and equity markets in recent weeks. Dubai Government bonds have been rising steadily since last month while prices of credit default swaps, or the cost of insuring against default, for Dubai and Abu Dhabi sovereign paper have dropped to their lowest levels this year.
However, the Dubai Government, and companies it controls, is still estimated to be carrying $85bn in outstanding debt, $6.8bn of which is due for payment by the end of the year. About $4.05bn of that represents the principal and profit payments owed by Nakheel.
The Central Bank's loan to Dubai has cut into its own foreign exchange reserves, Mr Fox said.
Analysts at the time suggested that the loans were denominated in US dollars so that they could still be counted as foreign--exchange reserves.
But because the bonds are domestic, they cannot be counted as foreign-exchange reserves.
With what analysts say is an estimated $24bn in remaining reserves, the Central Bank may not be able to afford to buy Dubai's next $10bn in bonds without leaving its own reserves depleted.
Many bankers and executives in the UAE have long assumed the Central Bank could count on support from Abu Dhabi if it needs it. But there is no explicit mechanism for transfers from Abu Dhabi to the Central Bank.
Until there is some clear statement of support from Abu Dhabi for such federal financing, Mr Fox said, Fitch could not include implicit support in its ratings for the UAE or for Dubai.
The downgrades follow a regular annual review of Abu Dhabi's sovereign rating by Fitch last week, when it reaffirmed its "AA" rating for Abu Dhabi's foreign-currency debt.
Neither the Government nor Dubai have sovereign ratings. "We felt it is no longer correct to treat obligations of the UAE sovereign and of Abu Dhabi in the same way," said Robert Thursfield, who heads financial institutions at Fitch in Dubai.
The ratings agency also warned that Abu Dhabi-linked companies may need sovereign help to service their debt obligations as state-owned companies alone raised $18bn in external bonds and loans so far this year.
In a separate move, Fitch also downgraded Dubai's utility Dubai Electricity and Water Authority and Dubai Holding Commercial Operations Group, a Dubai-based real-estate developer and hotel operator.
As well, it placed Etisalat, the national telephone company, on review for a possible downgrade. It cited Dubai's weaker credit profile and uncertainty about "how any government support may be provided".
uharnischfeger@thenational.ae
warnold@thenational.ae
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Engine: 3.5-litre V6
Transmission: eight-speed automatic
Power: 290hp
Torque: 340Nm
Price: Dh155,800
On sale: now
Scorebox
Dubai Hurricanes 31 Dubai Sports City Eagles 22
Hurricanes
Tries: Finck, Powell, Jordan, Roderick, Heathcote
Cons: Tredray 2, Powell
Eagles
Tries: O’Driscoll 2, Ives
Cons: Carey 2
Pens: Carey
SPEC%20SHEET%3A%20APPLE%20IPHONE%2015%20PRO%20MAX
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How will Gen Alpha invest?
Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.
“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.
Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.
He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.
Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Can NRIs vote in the election?
Indians residing overseas cannot cast their ballot abroad
Non-resident Indians or NRIs can vote only by going to a polling booth in their home constituency
There are about 3.1 million NRIs living overseas
Indians have urged political parties to extend the right to vote to citizens residing overseas
A committee of the Election Commission of India approved of proxy voting for non-resident Indians
Proxy voting means that a person can authorise someone residing in the same polling booth area to cast a vote on his behalf.
This option is currently available for the armed forces, police and government officials posted outside India
A bill was passed in the lower house of India’s parliament or the Lok Sabha to extend proxy voting to non-resident Indians
However, this did not come before the upper house or Rajya Sabha and has lapsed
The issue of NRI voting draws a huge amount of interest in India and overseas
Over the past few months, Indians have received messages on mobile phones and on social media claiming that NRIs can cast their votes online
The Election Commission of India then clarified that NRIs could not vote online
The Election Commission lodged a complaint with the Delhi Police asking it to clamp down on the people spreading misinformation
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"
'Ashkal'
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Youssef%20Chebbi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Fatma%20Oussaifi%20and%20Mohamed%20Houcine%20Grayaa%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
COMPANY%20PROFILE
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
The bio:
Favourite film:
Declan: It was The Commitments but now it’s Bohemian Rhapsody.
Heidi: The Long Kiss Goodnight.
Favourite holiday destination:
Declan: Las Vegas but I also love getting home to Ireland and seeing everyone back home.
Heidi: Australia but my dream destination would be to go to Cuba.
Favourite pastime:
Declan: I love brunching and socializing. Just basically having the craic.
Heidi: Paddleboarding and swimming.
Personal motto:
Declan: Take chances.
Heidi: Live, love, laugh and have no regrets.
How%20champions%20are%20made
%3Cp%3E%0D%3Cstrong%3EDiet%3C%2Fstrong%3E%20%0D%3Cbr%3E7am%20-%20Protein%20shake%20with%20oats%20and%20fruits%0D%3Cbr%3E10am%20-%205-6%20egg%20whites%0D%3Cbr%3E1pm%20-%20White%20rice%20or%20chapati%20(Indian%20bread)%20with%20chicken%0D%3Cbr%3E4pm%20-%20Dry%20fruits%20%0D%3Cbr%3E7.30pm%20-%20Pre%20workout%20meal%20%E2%80%93%20grilled%20fish%20or%20chicken%20with%20veggies%20and%20fruits%0D%3Cbr%3E8.30pm%20to%20midnight%20workout%0D%3Cbr%3E12.30am%20%E2%80%93%20Protein%20shake%20%0D%3Cbr%3E%3Cstrong%3ETotal%20intake%3A%3C%2Fstrong%3E%204000-4500%20calories%20%0D%3Cbr%3E%3Cstrong%3ESaidu%E2%80%99s%20weight%3A%3C%2Fstrong%3E%20110%20kg%0D%3Cbr%3E%3Cstrong%3EStats%3A%3C%2Fstrong%3E%20Biceps%2019%20inches.%20Forearms%2018%20inches%3C%2Fp%3E%0A
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Dr Amal Khalid Alias revealed a recent case of a woman with daughters, who specifically wanted a boy.
A semen analysis of the father showed abnormal sperm so the couple required IVF.
Out of 21 eggs collected, six were unused leaving 15 suitable for IVF.
A specific procedure was used, called intracytoplasmic sperm injection where a single sperm cell is inserted into the egg.
On day three of the process, 14 embryos were biopsied for gender selection.
The next day, a pre-implantation genetic report revealed four normal male embryos, three female and seven abnormal samples.
Day five of the treatment saw two male embryos transferred to the patient.
The woman recorded a positive pregnancy test two weeks later.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
