Dubai gets $20b debt rollover

Abu Dhabi: The Abu Dhabi Department of Finance and the UAE Central Bank on Sunday signed two separate agreements with Dubai Government to refinance a total of $20 billion in loans and bonds.

While the Government of Abu Dhabi has agreed to refinance $10 billion loan, the UAE Central Bank has also signed an agreement to extend the tenure of bonds issued by Dubai Government of $10 billion.

In both cases, the new tenure is set at five years renewable, with a fixed interest rate of 1 per cent through the entire tenure.

Dubai borrowed the money five years ago to help the government and its government-related entities (GREs) to meet some of the debt obligations in the face of the global financial crisis. The refinancing comes ahead of its maturity this year.

Widely anticipated rollover

The widely anticipated debt rollover agreements come at a time when Dubai’s economy led by trade, tourism and property sectors have made a major recovery in recent months.

The rollover is expected to enable Dubai to continue to spend on infrastructure leading up to the hosting of Expo 2020.

“The signing of these agreements is aimed at boosting the economic recovery the country is witnessing, and would contribute to realisation of the vision of our wise leadership,” said Al Suwaidi.

The legacy debt problems faced by Dubai entities have been largely moderated through prudent restructuring efforts with the local banks and international banks. “Signing of these agreements is consistent with the UAE’s prudent financial policy which aims at supporting and promoting economic growth. We, at the Central Bank, are constantly seeking to maintain a strong economy and a sound banking sector,” Al Kindi said.