Dubai May Need Help From Abu Dhabi to Fund Borrowing (Update2)
By Matthew Brown
Oct. 13 (Bloomberg) -- Dubai may need help from Abu Dhabi and the United Arab Emirates government to finance a surge in borrowing that paid for the world's tallest tower, palm tree- shaped man-made islands and stakes in banks worldwide.
Dubai's ``potential reliance'' will be ``most significant'' in coming years, Moody's Investors Service said in a report today. Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt at a faster pace than the economy grows, the New York-based rating firm said.
``These companies that are based in Dubai have become larger than Dubai itself,'' said Giyas Gokkent, chief economist at National Bank of Abu Dhabi, the U.A.E.'s second-largest commercial bank by assets. ``If anything were to go wrong with any of these companies, Dubai does not have the wherewithal to deal with it.''
State-owned Dubai World paid about $5.1 billion for almost 10 percent of Kirk Kerkorian's MGM Mirage last year; the price has tumbled since to $16.80 from $84. DP World, the government- run company that bought Peninsula and Oriental Steam Navigation Co. for $6.8 billion in 2006, has slumped 55 percent this year on the Dubai International Financial Exchange.
Ruler Sheikh Mohammed bin Rashid al-Maktoum has borrowed to replace Dubai's dwindling revenue from oil, investing to boost earnings from tourism and finance. State-owned carrier Emirates has increased its fleet to the largest in the Middle East, in a bid to double tourists per year to 15 million by 2015. Dubai Holding LLC, which groups assets belonging to Sheikh Mohammed, owns hotel chain Jumeirah Group.
Abu Dhabi Oil
Abu Dhabi, by contrast, owns more than 90 percent of the U.A.E.'s oil reserves, almost 8 percent of the world's total. The Abu Dhabi Investment Authority, its sovereign wealth fund, is the world's largest with assets of between $250 billion and $875 billion, according to the International Monetary Fund.
ADIA's Head of Media Relations Erik Portanger declined to comment on Moody's report.
Dubai's approach is backfiring as investors avoid the most indebted companies on concern the global credit crunch will increase defaults, while real-estate and company assets slump.
Deutsche Bank has fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007. Standard Chartered has declined 15 percent since state-owned Istithmar PJSC acquired a 2.7 percent stake for about $1 billion in October 2006.
The cost of insuring Dubai Holding's bonds has increased nearly four-fold since May, according to traders of credit default swaps. Credit-default swaps on Dubai Holding Commercial Operations traded at 679.3 basis points on Oct. 10, up from 172.99 at the beginning of May, CMA Datavision prices show.
The company's $500 million of 10-year notes due 2017 fell 2.2 percent today, raising the yield to a record 13.1 percent, Bloomberg data shows.
Dubai Model
While Dubai's economic model ``has proved successful to date, cumulative liabilities are currently rising faster than investments are able to generate returns,'' Moody's senior vice president in Dubai, Philipp Lotter, said in the report. This ``necessitates a clear understanding of wider implicit federal support when rating key government-backed corporation.''
Moody's expects a ``high level'' of support from Abu Dhabi for the ``most important'' publicly-owned companies in the U.A.E., Tristan Cooper, Moody's Middle East sovereign analyst, said in the report.
A spokesman for the Abu Dhabi government declined to comment on whether the emirate would assist its neighbor in meeting its debt obligations.
Abu Dhabi and Dubai are the two-largest emirates in the seven-member U.A.E. Dubai controls its economy through state- owned companies that dominate each major industry.
Mohammed Al Gergawi, chairman of Dubai Holding, and Sultan bin Sulayem, chairman of Dubai World, didn't answer their mobile phones when called for comment today.
`Unprecedented'
Abu Dhabi taking stakes in Dubai companies to help prop them up would be an ``unprecedented'' step ``that would have to be tested,'' Gokkent at the state-controlled National Bank of Abu Dhabi said in an interview. ``The Moody's debt numbers are conservative'' for Dubai, he said.
Dubai's benchmark stock index is down 44 percent as concerns over real-estate valuations and banks' access to capital weighed on investors.
``In most countries there are identifiable delineations between the public and private sectors,'' Cooper said in the report. ``In Dubai, however, the state corporatist model plus the fact that the ruler and his closest relatives form the core of the government make it difficult to draw such distinctions.''
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
[cite]Posted By: AFKABartram[/cite]
The signs were pointing to me that this would not have been the best thing for Charlton Athletic as we know it, so with that in mind, i am not sorry it has collapsed.
Not quite sure why you think us getting taken over would not have been a good thing. When now we're left with no money, a struggling team heading for league one and a clueless manager who we can't afford to pay off. I for one am extremely sorry it has collapsed.
what a disaster oh well we got to remember its our football club and we av got to get behind the players and battle our way back up the table even though we are finacially f---ed back to the 80s lets hope not ?
I mean - what have we got to lose?
You know, we came from nothing - we're going back to nothing.
What have we lost?
Nothing!
Always look on the right side of life...
Oh bollocks to all that, sod the lot of em, I hope Zabeel dissapears up its own set of Burkha's.
And this bit,
"This, combined with the current debate around foreign ownership of football clubs and the worsening economic climate in the UK, contributed to the decision by Zabeel to pull out."
Economic climate my ar5e, anyone else think that this might have something to do with the takeover of Liverpool which Zabeel are involved in, but not directly fronting????????????????
I only hope we've managed to fleece the gits for a few million in the process!!!!!!!!!!
[cite]Posted By: DA9[/cite]As Afka said, no one has died, we have lost nothing as we did not have it in the first place, lets face it people, this club has been throught worse news and survived, Live, Love, Laugh and Be Happy.
Fook me...you'll be wearing cardigans next.....;-)
We are no worse of than two weeks ago, but where will we be in Six months when the Parachute money runs out & we have no-one of any real value to sell, think that is my main concern now. Hopefully not in League 1 !
[cite]Posted By: DA9[/cite]As Afka said, no one has died, we have lost nothing as we did not have it in the first place, lets face it people, this club has been throught worse news and survived, Live, Love, Laugh and Be Happy.
Fook me...you'll be wearing cardigans next.....;-)
I've got a Stone Island one, does that count?
Only naughty men wear those....;-)
I saw a man of around 60 wearing one at Cannon Street this morning...didn't seem right....
Dont wear them often now mate, do you know why, saw Dale Winton wear one on TV once, thats when you know you have to give them up, just like Burberry being nicked by the chavs.
I'm going to go retro and get some jumbo cords and fila bj
I'm just glad it's done & dusted..................takeover...............did anyone really think it would happen?
I'm usually Mrs Optimistic, but I didn't think it would happen for one minute & their excuse/statement is laughable.
Can we get back to the football now?
Can I get back to hating & loathing the moaners & booers?
Can I get back to loving my football team safe in the knowledge it's still our's?
Shite football won't drag me down, poncy footballers won't drag me down, Pardoo won't drag me down..................sure as hell some Johnny Foriegners won't either!
If I can still support my beloved club whilst at Shitehurst................I can sure as hell survive this!
we can all change our views back to what they were a couple of weeks back...
foreign ownership is no good for football , buying success is wrong, everything about the premiership stinks , we've still got our little old charlton... blah blah blah
Comments
http://www.bloomberg.com/apps/news?pid=20601087&sid=av8CVL1H3T3U&refer=home
Dubai May Need Help From Abu Dhabi to Fund Borrowing (Update2)
By Matthew Brown
Oct. 13 (Bloomberg) -- Dubai may need help from Abu Dhabi and the United Arab Emirates government to finance a surge in borrowing that paid for the world's tallest tower, palm tree- shaped man-made islands and stakes in banks worldwide.
Dubai's ``potential reliance'' will be ``most significant'' in coming years, Moody's Investors Service said in a report today. Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt at a faster pace than the economy grows, the New York-based rating firm said.
``These companies that are based in Dubai have become larger than Dubai itself,'' said Giyas Gokkent, chief economist at National Bank of Abu Dhabi, the U.A.E.'s second-largest commercial bank by assets. ``If anything were to go wrong with any of these companies, Dubai does not have the wherewithal to deal with it.''
State-owned Dubai World paid about $5.1 billion for almost 10 percent of Kirk Kerkorian's MGM Mirage last year; the price has tumbled since to $16.80 from $84. DP World, the government- run company that bought Peninsula and Oriental Steam Navigation Co. for $6.8 billion in 2006, has slumped 55 percent this year on the Dubai International Financial Exchange.
Ruler Sheikh Mohammed bin Rashid al-Maktoum has borrowed to replace Dubai's dwindling revenue from oil, investing to boost earnings from tourism and finance. State-owned carrier Emirates has increased its fleet to the largest in the Middle East, in a bid to double tourists per year to 15 million by 2015. Dubai Holding LLC, which groups assets belonging to Sheikh Mohammed, owns hotel chain Jumeirah Group.
Abu Dhabi Oil
Abu Dhabi, by contrast, owns more than 90 percent of the U.A.E.'s oil reserves, almost 8 percent of the world's total. The Abu Dhabi Investment Authority, its sovereign wealth fund, is the world's largest with assets of between $250 billion and $875 billion, according to the International Monetary Fund.
ADIA's Head of Media Relations Erik Portanger declined to comment on Moody's report.
Dubai's approach is backfiring as investors avoid the most indebted companies on concern the global credit crunch will increase defaults, while real-estate and company assets slump.
Deutsche Bank has fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007. Standard Chartered has declined 15 percent since state-owned Istithmar PJSC acquired a 2.7 percent stake for about $1 billion in October 2006.
The cost of insuring Dubai Holding's bonds has increased nearly four-fold since May, according to traders of credit default swaps. Credit-default swaps on Dubai Holding Commercial Operations traded at 679.3 basis points on Oct. 10, up from 172.99 at the beginning of May, CMA Datavision prices show.
The company's $500 million of 10-year notes due 2017 fell 2.2 percent today, raising the yield to a record 13.1 percent, Bloomberg data shows.
Dubai Model
While Dubai's economic model ``has proved successful to date, cumulative liabilities are currently rising faster than investments are able to generate returns,'' Moody's senior vice president in Dubai, Philipp Lotter, said in the report. This ``necessitates a clear understanding of wider implicit federal support when rating key government-backed corporation.''
Moody's expects a ``high level'' of support from Abu Dhabi for the ``most important'' publicly-owned companies in the U.A.E., Tristan Cooper, Moody's Middle East sovereign analyst, said in the report.
A spokesman for the Abu Dhabi government declined to comment on whether the emirate would assist its neighbor in meeting its debt obligations.
Abu Dhabi and Dubai are the two-largest emirates in the seven-member U.A.E. Dubai controls its economy through state- owned companies that dominate each major industry.
Mohammed Al Gergawi, chairman of Dubai Holding, and Sultan bin Sulayem, chairman of Dubai World, didn't answer their mobile phones when called for comment today.
`Unprecedented'
Abu Dhabi taking stakes in Dubai companies to help prop them up would be an ``unprecedented'' step ``that would have to be tested,'' Gokkent at the state-controlled National Bank of Abu Dhabi said in an interview. ``The Moody's debt numbers are conservative'' for Dubai, he said.
Dubai's benchmark stock index is down 44 percent as concerns over real-estate valuations and banks' access to capital weighed on investors.
``In most countries there are identifiable delineations between the public and private sectors,'' Cooper said in the report. ``In Dubai, however, the state corporatist model plus the fact that the ruler and his closest relatives form the core of the government make it difficult to draw such distinctions.''
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
Not quite sure why you think us getting taken over would not have been a good thing. When now we're left with no money, a struggling team heading for league one and a clueless manager who we can't afford to pay off. I for one am extremely sorry it has collapsed.
Come on guys, cheer up!
Always look on the bright side of life...
Worse things happen at sea, you know.
Always look on the bright side of life...
I mean - what have we got to lose?
You know, we came from nothing - we're going back to nothing.
What have we lost?
Nothing!
Always look on the right side of life...
Oh bollocks to all that, sod the lot of em, I hope Zabeel dissapears up its own set of Burkha's.
And this bit,
"This, combined with the current debate around foreign ownership of football clubs and the worsening economic climate in the UK, contributed to the decision by Zabeel to pull out."
Economic climate my ar5e, anyone else think that this might have something to do with the takeover of Liverpool which Zabeel are involved in, but not directly fronting????????????????
I only hope we've managed to fleece the gits for a few million in the process!!!!!!!!!!
By the way, they ain't exactly setting the Prem alight at the moment, are they?
As Adrian Chiles always said on MOTD2 'in the end it's the hope that kills you'. And too bloody right. I'm gutted.
I've got a Stone Island one, does that count?
Nobody expected a takeover of this magnitude in their wildest dreams two weeks ago.
Nothing has changed at the club, it's still Charlton.
lol
Come on you lot let's carry on as we were we might even beat burnley!
;o)
still 46 minutes til the bloody Lion opens !
Dont wear them often now mate, do you know why, saw Dale Winton wear one on TV once, thats when you know you have to give them up, just like Burberry being nicked by the chavs.
I'm going to go retro and get some jumbo cords and fila bj
:)
Get behind the team, get behind the manager cheer the feckers on win lose or draw. No good whinging NO GOOD BOOING AFTER 5 MINUTES IT DOESN'T HELP.
If you want this club going somewhere it needs your support not bloody boo's.
In the immortal words of Delia
TO THE BEST FUSSBALL SUPPORTERS IN THE WORLD LET'S BE 'AVING YOU , WHERE ARE YOU COME ON.
Can't lose what you don't have!
I'm just glad it's done & dusted..................takeover...............did anyone really think it would happen?
I'm usually Mrs Optimistic, but I didn't think it would happen for one minute & their excuse/statement is laughable.
Can we get back to the football now?
Can I get back to hating & loathing the moaners & booers?
Can I get back to loving my football team safe in the knowledge it's still our's?
Shite football won't drag me down, poncy footballers won't drag me down, Pardoo won't drag me down..................sure as hell some Johnny Foriegners won't either!
If I can still support my beloved club whilst at Shitehurst................I can sure as hell survive this!
Live, Love, Laugh & be happy
:-D
lol
foreign ownership is no good for football , buying success is wrong, everything about the premiership stinks , we've still got our little old charlton... blah blah blah