no financing troubles for dubai inc
Last Updated : GMT 07:46:37
Arab Today, arab today
Arab Today, arab today

No financing troubles for Dubai Inc

Arab Today, arab today

Arab Today, arab today No financing troubles for Dubai Inc

Dubai - Arabstoday

Dubai state companies are securing bank financing as the latest tumult in global markets fails to derail the emirate\'s recovery from the 2009 downturn. Dubai Holding, one of the three main state-owned holding companies, reached an accord with lenders to extend a $1.16 billion (Dh4.26 billion) loan to December 2016, according to a company official. Port & Free Zone World, an intermediate holding company for port operator DP World, is raising $850 million to refinance debt, three bankers familiar with the plan said. Investment Corporation of Dubai (ICD) said on Monday it will repay $4 billion of loans when they mature on August 21. \"Banks are continuing to extend financing to Dubai Inc because of its improving economy and debt profile,\" Gus Chehayeb, a Dubai-based associate director at investment bank Exotix said by e-mail. There is \"encouraging evidence with regard to its willingness to repay debt, sell assets, and stay current on its interest payments,\" he said. Article continues below While about $8 trillion in value was erased from global stock markets between July 22 and Monday amid concern growth in Europe and the US is slowing, Dubai\'s share index is little changed and benchmark bonds have climbed. GDP set to grow Gross domestic product in the emirate, which received a $20 billion support in 2009 from its central bank and neighbouring Abu Dhabi, may grow about 2.8 per cent this year, according to the International Monetary Fund. The government estimates the economy grew 2.4 per cent in 2010 after contracting in 2009. The yield on Dubai\'s 7.75 per cent dollar-denominated bond due in 2020 rose 20 basis points, or 0.20 percentage point, to 6.73 per cent yesterday, according to data compiled by Bloomberg. It was at 6.85 at the end of June. After hitting a one month-high on Tuesday, the yield on Dubai\'s Islamic bonds due in 2014 declined 25 basis points on Wednesday to 4.62 per cent, the biggest one-day decline since December. It gained 10 basis points yesterday. ICD said on Monday it will repay the $4 billion of loans from internally generated cash, mainly dividends received from subsidiaries, according to a statement yesterday. \"ICD paying back $4 billion of maturing debt is a very strong message that Dubai\'s debt story is on an increasingly better footing,\" said Rawad Hakme, co-manager of fixed income at the UAE unit of EFG-Hermes Holding SAE. \"Credit investors are all the more comfortable when a borrower pays off its dues especially in times of global duress. Dubai\'s perceived creditworthiness is on the rise,\" he said. Very positive The cost to insure Dubai\'s debt against default dropped six basis points on Wednesday to 364 basis points, after hitting 370 on Tuesday, the highest level in more than three months, according to five-year credit default swaps from data provider CMA. The swaps, which pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements, are down about 44 per cent from the 655 basis points reached in November 2009 after state-owned Dubai World announced plans to restructure about $25 billion of debt.  

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