Thursday, Jun 14, 2012
--Dubai's business model remains strong and based on well set plans, official says
--Ability to refinance reflects trust imposed in Dubai's long-term economic model
By Leila Hatoum
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Dismissing concerns about Dubai's ability to meet its financial obligations, a senior official on Thursday highlighted the recent success of its government-related entities in refinancing or repaying their debt due this year as a vote of confidence in the emirate's economic model.
"Their ability to refinance their obligations when needed, reflects the trust of the financial institutions in Dubai's [GREs] and Dubai's long-term economic model. Without such a trust, there would be no refinance," Abdulrahman Al Saleh, director general at the emirate's Department of Finance, told Zawya Dow Jones in a telephone interview.
Saleh's comments come at a time when Dubai's Jebel Ali Free Zone, or Jafza, is set to sign a $1.2 billion loan with a group of banks, after raising a $650 million Islamic bond earlier in the week. The new debt will help repay ahead of time a 7.5 billion U.A.E. dirham ($2.04 billion) sukuk originally set to mature in November.
Two other government-related companies--Dubai Holding Commercial Operations Group and DIFC Investments--recently repaid or refinanced large borrowings which came due this year.
"The fact that Jafza, DIFCI and other Dubai government related entities are capable of meeting their financial obligations on time or even before maturity date is an indication on their sound financial planning, strong status and commitment towards their investors and creditors," Saleh said.
Several analysts late last year had raised concerns about Dubai's debt obligations this year, only a year after the state-owned Dubai World finalized a $25 billion debt restructuring.
Ratings agency Moody's Investor Service in December warned the three Dubai government-related entities--DHCOG, DIFCI and Jafza--that have debt repayments worth $3.8 billion due in 2012 may face refinancing risks, while raising wider concerns over the emirate's potential need for further financial support in the absence of capital-raising measures.
"This also sends a clear message in reply to what has been reported in the past, that Dubai's entities and Dubai's business model remain strong and are based on well set plans," Saleh said.
DHCOG, an arm of Dubai Holding, in February repaid a $500 million bond using its own cash. And DIFCI, the investment arm of the Dubai International Financial Centre, this month repaid a $1.25 billion Islamic bond by raising a $1.04 billion loan and repaying the remainder from internal funds.
-By Leila Hatoum, Dow Jones Newswires; +971-4-446-1686; leila.hatoum@dowjones.com; Twitter: @ZDJnews
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
14-06-12 0917GMT
