Dubai World, a firm owned by the Dubai government that includes property developer Nakheel, last week requested a debt moratorium on a £3.18bn Islamic bond. This led to market fears for the whole Emirate but the Dubai government last night came out and publicly distanced itself from the ailing firm.
Dubai finance minister Abdulrahman al-Saleh told Dubai Television: “[Creditors] think Dubai World is part of the government, which is not correct. Creditors need to take part of the responsibility for their decision to lend to the companies.”
Both Dubai and Abu Dhabi stock markets continued to slide today after record losses on Monday. The Nasdaq Dubai is at 1,858, down more than 200 points since the Dubai World announcement.
The FTSE has not been affected by the continuing debt problems. After a drop on Friday, the market has risen 78 points to 5268.92 this morning.
Dubai World says it is in the midst of a £15.8bn ($26bn) debt restructure with its banks, of which £3.7bn relates to the defaulted Nakheel Islamic bond or ‘sukuk’. It says the restructuring only relates to its Nakheel property business, not its other businesses which include the Dubai port business, DP.