Dubai : The Dubai government has no plans for a sovereign borrowing next year, and any capital raising activity in 2012 is likely to be small-scale, a senior government official said.
"Currently, there's no decision to issue bonds in 2012, mainly because the budget hasn't been finalised yet. So if there's a need, it would be to support the budget, and that would be very minor," Abdul Rahman Saleh Al Saleh, Director-General of the Dubai Department of Finance, told Zawya Dow Jones in a recent interview.
The Dubai government and some of its affiliated companies have successfully tapped the financial markets several times since Dubai World announced a standstill on its debt repayments in November 2009.
Dubai World, including its then affiliate Nakheel, subsequently finalised a $25 billion (Dh91 billion) debt restructuring deal.
Earlier this year, the Dubai government issued a 10-year bond worth $500 million and state-owned Emirates airline and Dubai-based property developer Emaar Properties have also successfully tapped the markets in 2011.
Al Saleh said he doesn't expect Dubai's ability to raise finance will be affected by the Eurozone crisis, noting that the emirate received good demand for its $500 million bond in Europe this summer, despite going to the market at a time of turmoil in the Eurozone.
"I don't see the [Eurozone] crisis affecting our ability to borrow, even in Europe," Al Saleh said, noting that the interest rate on the government's 2011 borrowing was lower than its previous bond issue in 2010.
The emirate has also received healthy interest from Asian investors in participating in its borrowings, Al Saleh said.
Al Saleh said that Dubai government-related entities are in "no hurry" to sell assets in order to raise finance, and is prepared to wait for asset prices to recover rather than sell at distressed prices.
Options
"Our option is either to sell at distressed prices or wait to sell at better values in the future, and that was what we did. We still believe the same," Al Saleh said.
Al Saleh expressed confidence that Dubai can meet all its financial obligations in coming years.
Asked if Dubai could request assistance from Abu Dhabi or the federal government, Al Saleh said all the emirates in the federation coordinate closely and can request financial help "should the need arise in the future".
"There's close and continuous coordination between the emirates' governments via federal channels, and if there's a need, there's direct coordination," he said.
Dubai received a total of $20 billion from Abu Dhabi and the Central Bank to help repay Nakheel bond issues and support the Dubai World restructuring.
In the interview, Al Saleh expressed confidence that the Jebel Ali Free Zone Authority (Jafza), a government-related company that faces a $2 billion bond repayment in November 2012, will be able to refinance its obligations successfully. He said Jafza hadn't requested any support from the government of Dubai.
"They haven't asked for the government's help in this regard... I don't believe they will face any hardship in their refinancing," he said.
Earlier this month, ratings agency Moody's Investor Service warned that Jafza and two other Dubai government-related entities that have debt repayments worth $3.8 billion due in 2012 may face refinancing risks.
The other companies are Dubai Holding Commercial Operations Group and DIFC Investments, which also have bond payments due in 2012. Moody's estimated the total debt of the Dubai government and state-owned non-financial companies at $101.5 billion.
No obligation
Al Saleh said the government of Dubai isn't legally obligated to guarantee the debts of government-related companies, though it intervened in the case of Dubai World because "companies of such large scale can affect the whole economy."
He said Dubai sovereign debt is less than $30 billion.
He ruled out channelling money from successful state companies such as Emirates airline to others that are still working through their debt repayments.
"We don't operate this way," he said.