Business | Economy

Nakheel bond to be paid in full

Abu Dhabi and UAE Central Bank give $10b in support, Dubai World welcomes decision, Dubai Government expected to announce new legal framework

  • Staff Report
  • Published: 08:56 December 14, 2009

  • Image Credit: AP
  • The news comes on the same day that Nakheel's $4 billion (Dh14.6 billion) sukuk had been due to mature.
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Dubai Government has authorised the release of $4.1b which will be used to pay Nakheel’s sukuk.

A statement from the Dubai Financial Support Fund said that the government of Abu Dhabi and the UAE Central Bank had provided $10b in support.

Dubai Government is also expected to announce legal steps which will allow Dubai World to restructure completely.

The statement also added that the UAE Central Bank would provide support for local banks.

The news comes on the same day that Nakheel's $4 billion (Dh14.6 billion) sukuk had been due to mature. It had originally asked for a deferment on payment of the bond on November 25.

A statement from Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee said: “The Government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.

“As a first action for the new fund, the Government of Dubai has authorized $4.1 billion to be used to pay the sukuk obligations that are due today."

He added that the remaining funds will also "provide for interest expenses and company working capital through April 30, 2010" but only on the condition that Nakheel negotiates a standstill on it's future debt repayments. 

Dubai World welcomes support

Dubai World welcomed the support, saying that it provides "Funding and a stable basis for the restructuring process which continues."

A statement added that: "Dubai World will continue to work with financial creditors to negotiate a standstill in an orderly way. As long as a standstill is successfully negotiated, Dubai World has assurances that the Government of Dubai, through the DFSF, will provide financial support to cover working capital and interest expenses to ensure the continuity of key projects.

"Dubai World is committed to regular, direct and timely communications which it believes will yield the best outcome for all stakeholders."

Strong and vibrant global financial centre

Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee (SFC) reassured investors, financial and trade creditors, employees, and citizens all out support of the government and has said that Dubai is, and will continue to be, a strong and vibrant global financial centre, adds WAM.

"The Government of Dubai remains committed to its high standards and its obligations. We are confident in our economic model, and we are confident in the long-term health and outlook for our economy", he said in a statement on Monday.

"The actions taken today are consistent with our market development, and we believe they are the actions that will best serve the interests of all stakeholders," he added.

Issue resolved

Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said about the latest developments, "The issue has been resolved proving our leadership has the will and the means to solve our problems. We have no problem moving our economy in the right direction."


 

Comments (18)

  1. Added 17:33 December 14, 2009

    This is an excellent news for all. The timely support given by Central bank will go a long way in improving and stabilising confidence of investors and business community. The wild rumours making rounds in the international financial markets; mainly due to huge negative hype (for Dubai's financial capacity) created by western media since November 25; should be put to rest.

    Atul Shukla, Dubai, United Arab Emirates

  2. Added 16:19 December 14, 2009

    We had a great laugh at the western media when we read this report. Excellent job and a great effort from the leaders of UAE. Time and again we have proven them wrong "hope they get the message". What a wonderful news to start the holiday season.

    Steve, Dubai, United Arab Emirates

  3. Added 14:52 December 14, 2009

    Never doubted; Indeed a great step from our leaders which will boost the confidence of investors & residents in Dubai & in United Arab Emirates in whole. Hope the western media is listening and gets to learn that we stand together at all times as one nation – “Stop being jealous of us and start looking at your own problems”

    Faiz Sharif, Dubai, United Arab Emirates

  4. Added 14:39 December 14, 2009

    The UAE government has once again proved the mightiness of its leadership. Such quick and effecient decisions cannot be seen in any part of the world. Salute to the Leaders.

    Abhishek Kishore, Dubai, United Arab Emirates

  5. Added 14:11 December 14, 2009

    Good news. The whole world is talking against 'Dubai World'... Let us show the world who we are. Long live UAE

    Ashok V, Dubai, India

  6. Added 14:10 December 14, 2009

    I hope this great news will put International Media to Shame who starting spreading the news of Dubai possible default. UAE is a winner and can overcome anything without any doubts. Cheers to the wonderfull leadership of UAE ! God bless UAE and its Nation

    Saeed, Dubai, United Arab Emirates

  7. Added 13:47 December 14, 2009

    Once again Kudos to the government of UAE ! Proved the criticisms raised were baseless and speculative.This clearly demonstrates the strength, unity, vigour, power and oneness of the leaders in UAE. Obviously a big lesson for the polities of the world where people just stand to blame and point each other for the mishaps. I believe the whole world should stand together to revamp the global recession likewise!!!!

    Suhani Khan, Dubai, United Arab Emirates

  8. Added 13:36 December 14, 2009

    This is really good gesture from Abu Dhabi government. They have indeed acted like a good brother. Having spend more than 8 years in UAE, I was really upset with the negative news about Dubai. I hope this cooperation will help stabilize the markets and investor confidence.

    S Kamble, Manchester, United Kingdom

  9. Added 13:25 December 14, 2009

    Congratulations to the great rulers of UAE for acting at the right time. This is the right time to show the world that all the emirates are interlinked and Dubai World's problem does not by any means will hamper the progress of this great nation. We salute the government for acting so swiftly. Long Live UAE !!

    Pradeep Siddharth, Dubai, United Arab Emirates

  10. Added 12:44 December 14, 2009

    Congratulations. This has also shown in rise in DFM index. As Always the Big Brother (AUH) has helped to slavage this situation. Hope the new structure will bring more good news for the economy.

    Surendra, Dubai, United Arab Emirates

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