Dubai: Dubai World on Tuesday said it has begun talks with banks to restructure $26 billion of its debt, adding that its remaining liabilities are on a "stable financial footing".
The group asked Nakheel's sukuk holders to appoint a representative for negotiations. The Nakheel sukuk represents $6 billion of the stated debt.
This debt is significantly lower than its declared debt of $59 billion, and represents only slightly more than a quarter of its total assets of nearly $100 billion.
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, told the media that the emirate's economy is strong and solid.
He attributed the global reaction to the restructuring plan as "a lack of understanding about what is happening in Dubai".
Markets greeted the news positively and most recovered some of their losses.
Nick Chamie, analyst at RBC Capital Markets, said: "This is positive. The market was feeding on its own concern and there was talk of $60 billion debt that would need to be restructured."
"The proposed restructuring process will only relate to Dubai World and certain subsidiaries including Nakheel and Limitless. It will not include Infinity World Holding, Istithmar World and Ports and Free Zone World, all of which are on a stable financial footing," a Dubai World statement said on Tuesday.
The $26 billion figure "confirms that it's a relatively minor problem," Michael Atkin, head of sovereign research at Putnam Investments in Boston, said.
The cost of protecting against a default by Dubai fell 53 basis points to 517, extending Tuesday's first decline in a week, according to credit-default swap prices from CMA Datavision.
- With input from agencies
