Instant View: Dubai World in initial debt deal

DUBAI (BestGrowthStock) – Dubai World , the indebted state-owned conglomerate, has reached a deal in principal to restructure $23.5 billion with its core bank creditors, the company said in a statement on Thursday.

The deal, which requires no new support from the government, must still be approved from banks outside the core negotiating committee, the company said.

The conglomerate’s plans to delay repayment of $26 billion in debt last November stunned global markets.

A coordinating committee of seven banks represented nearly 100 creditors during the negotiations with Dubai World.

ANALYSTS’ COMMENTS:

MARTIN KOHLHASE, ASSISTANT VICE PRESIDENT, MOODY’S

“It’s an important step to improve the credit environment here in Dubai and the UAE. It’s been long awaited. Still, if core banks have agreed, it doesn’t mean that necessarily it’s a signed deal yet. It’s a step in the right direction.”

“We have a number of ratings under review. With regards to the Jebel Ali Free Zone, which is part of DW group, this may effect our ratings decision on them.”

HAISSAM ARABI, CHIEF EXECUTIVE AT GULFMENA ALTERNATIVE INVESTMENTS

“This closes the main chapter but that doesn’t mean we don’t have a bumpy ride ahead. There are still issues such as Dubai Holding and other but this has been mostly discounted for. The air is not completely clear but the main chapter is,” he says.

“Our instant view is positive, this is good news for both sides as this has been overshadowing sentiment and affecting the market’s performance. The market has been longing for this to happen.”

MOHIEDDINE KRONFOL, MANAGING DIRECTOR AT ALGEBRA CAPITAL:

“It’s a largely expected but positive development. It allows us to put issue of Dubai World behind us and focus on other companies that need to get their finances in order. I think they (holdouts among local banks) will ultimately fall in line. The market has largely priced in the expectation of an agreement.”

ALI KHAN, MANAGING DIRECTOR AND HEAD OF BROKERAGE AT ARQAAM CAPITAL

“Any time you have progress it is positive, we should see a positive reaction (from the markets)….I suspect a mixed session: we still need to understand how the local banks are involved and the impact of the final terms.”

ARIS KEKEDJIAN, CEO OF GE CAPITAL MARKETS, MIDDLE EAST, AFRICA

“It will help put this chapter behind us and help the market look to the future. It’s what we need. There are still a lot of global concerns that trump the retail concerns. Right now the markets are more globally focused, particularly with what’s happening in Europe. But its progress in the right direction.”

ZAHED CHOWDHURY, EQUITY SALES, ALMAL CAPITAL

“I think this is not anything new. It hasn’t changed from what was suggested 3 months ago.”

“This means relatively little for debt markets. The macro headwinds coming out of the Eurozone are more than enough to keep investors and markets focused elsewhere.”

“I don’t think it makes a whole lot of change for anyone in Dubai in terms of opening up credit markets to either sovereign or corporate borrowers.”

Stock Market Research

(Reporting by Dubai bureau)

Instant View: Dubai World in initial debt deal