Borse Dubai in talks to refinance loans

Dubai/London: Borse Dubai Ltd. is in talks to refinance $4.2 billion (Dh15.4 billion) of loans at interest rates tied to the price of credit-default swaps, raising the cost of the debt, said three bankers with knowledge of the transaction.

The new debt may pay interest equivalent to 6 percentage points over the London interbank offered rate on loans for three years, said the bankers, who declined to be named because the negotiations are private.

That compares with a margin of 1.1 percentage points on the existing loans, which were used to buy Sweden's OMX AB last year. The rate may reference credit-default swaps to better reflect the chance that banks won't get repaid.

Arguments later

"This plan speaks to the dethroning of Libor and liquidity issues," said Ala'a Al Yousuf, chief economist at Gulf Finance House in London.

"There's a need for a refinancing package or liquidity facility now. Arguments and decisions about fiscal-policy rules in the UAE can come later."