Markets opened down across the Gulf this morning amid continued nervousness among investors over whether Dubai World will secure a standstill on its debt repayments.
The Dubai Financial Market was down 1.75 per cent this morning as the struggling state-owned conglomerate opened crunch talks with more than 90 banks to secure agreement for a six-month suspension of all repayments on its $22 billion debts.
In Abu Dhabi, which last week stepped in with a $10 billion bailout for Dubai World, the main index was down 0.81 per cent, with investors concerned that Dubai’s state owned businesses will continue to depend on its oil rich neighbour.
Markets were also down in the region’s largest economy, Saudi Arabia, as well as Kuwait, Qatar, Oman and Jordan.
Leading creditors have signalled, ahead of the meeting, that they are prepared to agree to the standstill on repayments and will attempt to force smaller banks into accepting a restructuring of Dubai World’s debts.
Opening at the Dubai World Trade Centre this morning, these are the first official talks between Dubai World and all its creditors since the state owned conglomerate stunned international markets by requesting the standstill on November 25.
Banks with smaller stakes in Dubai World are expected to demand immediate repayment in full today. Those with long-term interests in Dubai and the Gulf region will seek to persuade them to accept a longer-term restructuring, including the sale of some Dubai World assets.
Bankers signalled to The Times yesterday that a longer-term restructuring will enable many of Dubai World’s real estate assets to regain much of their former value, following the collapse in the city’s property market this year.
Going into the talks, Dubai World has indicated it expects negotiations to be lengthy and complicated. However, representatives added that the company now has sufficient cashflow for the coming months and is in the strongest shape it has been in since the November 25 announcement.
Dubai Real Estate Market 