Goodbye Dubai
Join Date: Apr 2001
Location: Adrift upon the tides of fate
Posts: 1,840
Likes: 0
Received 0 Likes
on
0 Posts
but the idea that after that nobody would lend a cent to anyone in Dubai is a bit far-fetched.
As to quoting the opinion of the head of HSBC- why bother? What would you expect him to say?
Join Date: Jun 2006
Location: Dunesville
Posts: 339
Likes: 0
Received 0 Likes
on
0 Posts
As the boss at HSBC said today - “I am confident that the leadership of Dubai and the UAE will overcome any short-term issues they face – which appear to have been somewhat sensationalised”
AUH have the same problem of assessing and identifying the assets worth salvaging from those that need to fail. To give a blank cheque as many expected would have been to give money to the thieves and corrupt who created the mess.
Join Date: Jan 2002
Location: West Country
Posts: 1,271
Likes: 0
Received 0 Likes
on
0 Posts
What did you think GM did before they went bust?
Nakheel is bankrupt everyone knows that but this daft idea that if it is allowed to go to the wall nobody would ever lend to Dubai ever again is plain fantasy.
As to quoting the opinion of the head of HSBC- why bother? What would you expect him to say?
You are joking surely?
short flights long nights
wow............interesting thoughts
Thread Starter
Join Date: Jan 2000
Posts: 212
Likes: 0
Received 0 Likes
on
0 Posts
Jet II:
The one thing you are not understanding is not the issue of whether Dubai would or would not be able to get credit.......you can always get a loan. The key is how much is it going to cost you?
Since you referenced Argentina as a "model" of success following default previous, here is what happened there in late 2001 when they defaulted:
The yields on Russian bonds during their default in 1998 went to similar levels and took down Long Term Capital Management in the process.
I am not suggesting the UAE would be in default; however, because of the "close association" the government has with these companies, it would be natural to assume if the government does nothing to alleviate this situation the markets will use a very "broad brush" when loaning funds to any entity in the UAE.
Companies would get hit very hard on bond issues but also banks (and therefore mortgages rates, car loans, personal loans, etc).
I would hate to see the UAE property market with 30% mortgages rates; if you think the decline so far has been spectacular......you ain't seen nuthin yet!
The one thing you are not understanding is not the issue of whether Dubai would or would not be able to get credit.......you can always get a loan. The key is how much is it going to cost you?
Since you referenced Argentina as a "model" of success following default previous, here is what happened there in late 2001 when they defaulted:
Argentina bond yields hit 42pc
By David Litterick
Published: 12:01AM GMT 11 Dec 2001
ARGENTINA'S MerVal stock index fell 7.58pc to 235.12 last night as the country's risk premium on bonds jumped amid growing concerns about a possible default on debt payments.
The yield on Argentine bonds is now 42.06pc above that of comparable US Treasury bonds.
By David Litterick
Published: 12:01AM GMT 11 Dec 2001
ARGENTINA'S MerVal stock index fell 7.58pc to 235.12 last night as the country's risk premium on bonds jumped amid growing concerns about a possible default on debt payments.
The yield on Argentine bonds is now 42.06pc above that of comparable US Treasury bonds.
I am not suggesting the UAE would be in default; however, because of the "close association" the government has with these companies, it would be natural to assume if the government does nothing to alleviate this situation the markets will use a very "broad brush" when loaning funds to any entity in the UAE.
Companies would get hit very hard on bond issues but also banks (and therefore mortgages rates, car loans, personal loans, etc).
I would hate to see the UAE property market with 30% mortgages rates; if you think the decline so far has been spectacular......you ain't seen nuthin yet!
Join Date: Jun 2006
Location: U.K.
Posts: 54
Likes: 0
Received 0 Likes
on
0 Posts
Code:
What did you think GM did before they went bust?
Nakheel is a CLEVER BY HALF boiler room operation. They have created, don't know how many 100s-1000s of sf-ft of real estate in the sea that nobody is interested in buying, except for corrupt politician from the 3rd world, single-mum sallys from liverpool/munchester and the worldwide mafia.
Has anybody considered, if DW is declared insolvent, the cost of ensuring that the PALM, WORLD and whatever, does not turn into a geo-biological (my term) disaster. The Island have some huge maintenance costs.
And don't equate USA and UK with DXB. USA and UK have their currency - reserve currency of the world- to fall back upon, they can print to deflect some or all of their debt, ofcourse at a cost, but then still print money. DXB has diddly squirt.
Pray AUH does not exit the union. I am sure that is one of their main bargaining chips against the northern paupers.
Join Date: Jun 2001
Posts: 1,451
Likes: 0
Received 0 Likes
on
0 Posts
What might save Dubai is the old saying (I think) first coined by Rupert Murdoch when he was going through a rough financial patch (and when a million dollars was a LOT of money). "You owe the bank a million and can't repay it, you've got a problem. You owe the bank a hundred million and can't repay it, the bank's got a problem."
Thread Starter
Join Date: Jan 2000
Posts: 212
Likes: 0
Received 0 Likes
on
0 Posts
For those who might be interested, here is the link to the Dubai exchange. Markets open @ 0600 UTC.
Market@Desktop
Market@Desktop
Thread Starter
Join Date: Jan 2000
Posts: 212
Likes: 0
Received 0 Likes
on
0 Posts
Interesting geopolitical view on all this.
Note the analysis is from the U.S. so it is somewhat bias as well as some of the info might not be 100% accurate (do we really have 300 flights/week to Iran LOL!). Having said that, the "angle" is interesting.
Note the analysis is from the U.S. so it is somewhat bias as well as some of the info might not be 100% accurate (do we really have 300 flights/week to Iran LOL!). Having said that, the "angle" is interesting.
The Geopolitics Of The Dubai Debt Crisis: It's Iran vs. The United States
John Carney|Nov. 28, 2009, 6:36 PM | 8,217 |26
PrintTags: Financial Services, Dubai, Financial Crisis, Markets, Wall Street, Economy, Banks, Asia, HSBC
The role of Iran may be the most overlooked in the Dubai debt crisis.
Of all the states of the United Arab Emirates federation, Dubai has maintained the closest ties to Iran. Indeed, as international pressure has built on Iran over the past decade, Dubai has prospered from those ties. It provides critical banking and trade links for Iran, often serving as the go-between for European or Asian companies and financial firms that want to do business with Iran without violating international sanctions.
Abu Dhabi, the wealthiest member of the UAE and a close ally of the US, may be pressuring Dubai to limit its links to Iran. Indeed, this pressure may be behind statements coming from Abu Dhabi about offering “selective” support for Dubai. Companies or creditors thought to be too linked to Iran could find themselves shut out of any bailout.
The United States government, which has remained somewhat taciturn throughout this crisis, is no doubt encouraging Abu Dhabi to apply this pressure. In part because of Dubai’s connections to Iran, US financial institutions are not among the biggest creditors to Dubai World.
It’s not all Iran, of course. The problems in Dubai, the member of the United Arab Emirates that has found itself in a dire financial crisis, closely mirror those behind the global financial crisis.
Over the past decade, the country attempted to diversify its economy away from dependence on its declining oil reserves—and largely succeeded. But, like a Wall Street investment bank attempting to overcome the decline of its traditional businesses by becoming heavily invested in leveraged real estate products, Dubai accumulated huge debt obligations—estimated to amount to some $80 billion. Much of Dubai’s assets were dependent on tourism, shipping, construction and real estate—which have been in trouble during the global economic downturn.
Like its fellow members of the UAE, Dubai is ruled by an expansive royal family. In this case, they are called Al Maktoum family. Exactly what counts as the personal property of ruling family and what is government owned in Dubai is more than a bit fuzzy. The Dubai government owns three companies: the Investment Corporation of Dubai; Dubai Holding, which is run by Mohammed Al Gergawi; and Dubai World, which is run by Sultan bin Sulayem.
Abu Dhabi has been trying to put pressure on Dubai to cut ties to Iran. The split between Abu Dhabi and Iran is in part rooted in an older territorial dispute, fear of Iran’s nuclear ambitions, religious differences between Shiites and Sunnis, and—importantly—Abu Dhabi’s close ties to Washington, DC.
The UAE is close to reaching a nuclear power cooperation deal with Washington, a move that many regional experts say would challenge the traditional Saudi hegemony in the Gulf. One sticking point in the negotiations with Washington has been concerns that Dubai could share US nuclear technology with Iran.
This power struggle between Abu Dhabi and Saudi Arabia is also playing a role. In May, the UAE May pulled out of a proposed Gulf monetary union over Saudi insistence that it would host the regional central bank.
Dubai, which is a very open and tolerant place compared to Iran, is viewed by many Iranians as a place to let their hair down. It has a thriving Iranian ex-pat community. Iran is Dubai airport's top destination, with more than 300 flights per week.
More importantly, Dubai is a major exporter to Iran and a major re-exporter of Iranian goods. The trade between Iran and Dubai is one of the principal sources of Tehran's confidence that it can survive US-led sanctions. Iranian investment in Dubai amounts to about US $14 billion each year. US intelligence officials have long suspected that the Iranian government uses Dubai based front companies to get around sanctions.
Some of the banks said to have the largest exposure to Dubai debt have in the past been linked to Iran. Notably, HSBC, BNP Paribas and Standard Chartered came under investigation and pressure from US authorities in recent years to cut ties to Iran. Some US officials have quietly protested that these banks just shifted to doing business with Iran through Dubai. The US may want to see these creditors take losses from their Dubai exposure.
Make no mistake: the US government does not want to see the financial ruin of Dubai. Apart from its ties to Iran, Dubai is widely viewed as a model Islamic country. It has a relatively clean government, and there is a remarkable level of religious tolerance and progressive attitudes toward women for the region. American diplomats have held up Dubai as their model for a new Baghdad—progressive, tolerant, and capitalist.
What is most likely happening is more nuanced. The US and Abu Dhabi are hoping to use Dubai’s financial troubles as a way of finally severing the close ties to Iran. For years, Dubai has enjoyed the benefits of walking the line between its military and economic alliance with the US and economic benefits from banking and trade ties to Iran. The price of a bailout from Abu Dhabi may be having to finally choose to give up the Iran connection.
John Carney|Nov. 28, 2009, 6:36 PM | 8,217 |26
PrintTags: Financial Services, Dubai, Financial Crisis, Markets, Wall Street, Economy, Banks, Asia, HSBC
The role of Iran may be the most overlooked in the Dubai debt crisis.
Of all the states of the United Arab Emirates federation, Dubai has maintained the closest ties to Iran. Indeed, as international pressure has built on Iran over the past decade, Dubai has prospered from those ties. It provides critical banking and trade links for Iran, often serving as the go-between for European or Asian companies and financial firms that want to do business with Iran without violating international sanctions.
Abu Dhabi, the wealthiest member of the UAE and a close ally of the US, may be pressuring Dubai to limit its links to Iran. Indeed, this pressure may be behind statements coming from Abu Dhabi about offering “selective” support for Dubai. Companies or creditors thought to be too linked to Iran could find themselves shut out of any bailout.
The United States government, which has remained somewhat taciturn throughout this crisis, is no doubt encouraging Abu Dhabi to apply this pressure. In part because of Dubai’s connections to Iran, US financial institutions are not among the biggest creditors to Dubai World.
It’s not all Iran, of course. The problems in Dubai, the member of the United Arab Emirates that has found itself in a dire financial crisis, closely mirror those behind the global financial crisis.
Over the past decade, the country attempted to diversify its economy away from dependence on its declining oil reserves—and largely succeeded. But, like a Wall Street investment bank attempting to overcome the decline of its traditional businesses by becoming heavily invested in leveraged real estate products, Dubai accumulated huge debt obligations—estimated to amount to some $80 billion. Much of Dubai’s assets were dependent on tourism, shipping, construction and real estate—which have been in trouble during the global economic downturn.
Like its fellow members of the UAE, Dubai is ruled by an expansive royal family. In this case, they are called Al Maktoum family. Exactly what counts as the personal property of ruling family and what is government owned in Dubai is more than a bit fuzzy. The Dubai government owns three companies: the Investment Corporation of Dubai; Dubai Holding, which is run by Mohammed Al Gergawi; and Dubai World, which is run by Sultan bin Sulayem.
Abu Dhabi has been trying to put pressure on Dubai to cut ties to Iran. The split between Abu Dhabi and Iran is in part rooted in an older territorial dispute, fear of Iran’s nuclear ambitions, religious differences between Shiites and Sunnis, and—importantly—Abu Dhabi’s close ties to Washington, DC.
The UAE is close to reaching a nuclear power cooperation deal with Washington, a move that many regional experts say would challenge the traditional Saudi hegemony in the Gulf. One sticking point in the negotiations with Washington has been concerns that Dubai could share US nuclear technology with Iran.
This power struggle between Abu Dhabi and Saudi Arabia is also playing a role. In May, the UAE May pulled out of a proposed Gulf monetary union over Saudi insistence that it would host the regional central bank.
Dubai, which is a very open and tolerant place compared to Iran, is viewed by many Iranians as a place to let their hair down. It has a thriving Iranian ex-pat community. Iran is Dubai airport's top destination, with more than 300 flights per week.
More importantly, Dubai is a major exporter to Iran and a major re-exporter of Iranian goods. The trade between Iran and Dubai is one of the principal sources of Tehran's confidence that it can survive US-led sanctions. Iranian investment in Dubai amounts to about US $14 billion each year. US intelligence officials have long suspected that the Iranian government uses Dubai based front companies to get around sanctions.
Some of the banks said to have the largest exposure to Dubai debt have in the past been linked to Iran. Notably, HSBC, BNP Paribas and Standard Chartered came under investigation and pressure from US authorities in recent years to cut ties to Iran. Some US officials have quietly protested that these banks just shifted to doing business with Iran through Dubai. The US may want to see these creditors take losses from their Dubai exposure.
Make no mistake: the US government does not want to see the financial ruin of Dubai. Apart from its ties to Iran, Dubai is widely viewed as a model Islamic country. It has a relatively clean government, and there is a remarkable level of religious tolerance and progressive attitudes toward women for the region. American diplomats have held up Dubai as their model for a new Baghdad—progressive, tolerant, and capitalist.
What is most likely happening is more nuanced. The US and Abu Dhabi are hoping to use Dubai’s financial troubles as a way of finally severing the close ties to Iran. For years, Dubai has enjoyed the benefits of walking the line between its military and economic alliance with the US and economic benefits from banking and trade ties to Iran. The price of a bailout from Abu Dhabi may be having to finally choose to give up the Iran connection.
Join Date: Jun 2006
Location: Dunesville
Posts: 339
Likes: 0
Received 0 Likes
on
0 Posts
Interesting angle as you say but perhaps not that far fetched. Just coincident that Iran has announced that it will increase its Uranium enrichment program?
Dubai has been under pressure for some time to provide account details of individuals and companies in the past that have been suspected of terrorist links. The UK foreign office even increased the security threat in Dubai last year which was seen as a tit-for-tat response to Dubai's lack of cooperation.
The timing of the debt default announcement, the computer problems on the FTSE limiting the fallout... there is more to this than we know but Dubai is going to be cut down to size one way or another.
Dubai has been under pressure for some time to provide account details of individuals and companies in the past that have been suspected of terrorist links. The UK foreign office even increased the security threat in Dubai last year which was seen as a tit-for-tat response to Dubai's lack of cooperation.
The timing of the debt default announcement, the computer problems on the FTSE limiting the fallout... there is more to this than we know but Dubai is going to be cut down to size one way or another.
Last edited by Marooned; 30th Nov 2009 at 04:40.
Thread Starter
Join Date: Jan 2000
Posts: 212
Likes: 0
Received 0 Likes
on
0 Posts
Things looking up a bit this morning. The UAE finally announced it would provide support to local and international banks exposed to this:
In addition they just announced a coupon payment that was due today from JAFZA will be paid as scheduled:
It appears to me Dubai/Abu Dhabi "tested the waters" on the timing and method they used to begin this unwind process. They watched the response over the past 4 days and it obviously has become apparent to them they are not going to get away with a "stand back and watch it happen" strategy.
I would guess Abu Dhabi is going to backstop the bank losses as they need the banks to provide lending facilities going forward. However, it appears to me they are "culling" the crap companies from the Dubai portfolio and are going to put the losses on investors in these companies. Selective but actually not a bad strategy at this point.
It will be interesting to see how the DFM does today and how much FDI is removed.
In any case, in my opinion this is a game changer for the future of Dubai. The next 6 months will be VERY interesting.
U.A.E. Eases Credit After Dubai World Debt Delay (Update1) Share Business Exchange*******Facebook| Email | Print | A A A
By Arif Sharif
Nov. 30 (Bloomberg) -- The United Arab Emirates’ central bank eased credit for lenders and said it “stands behind” the country’s local and foreign banks as they face losses from Dubai World’s possible default.
Markets from Asia to the U.S. fell last week after Dubai World on Nov. 25 announced that it was seeking to delay loan repayments. Dubai’s stock markets will trade on Monday for the first time since the news. Banks will be able to borrow money from the regulator for half a percentage point above the three- month local benchmark interest rate, the Abu Dhabi-based Central Bank of the U.A.E. said in an e-mailed statement yesterday.
“This is a timely pre-emptive move from the central bank,” Ahmet Akarli, an economist at Goldman Sachs Group Inc. in London said in a note to investors. The central bank is “ensuring that local markets are operational” and banks “have access to ample liquidity.”
By Arif Sharif
Nov. 30 (Bloomberg) -- The United Arab Emirates’ central bank eased credit for lenders and said it “stands behind” the country’s local and foreign banks as they face losses from Dubai World’s possible default.
Markets from Asia to the U.S. fell last week after Dubai World on Nov. 25 announced that it was seeking to delay loan repayments. Dubai’s stock markets will trade on Monday for the first time since the news. Banks will be able to borrow money from the regulator for half a percentage point above the three- month local benchmark interest rate, the Abu Dhabi-based Central Bank of the U.A.E. said in an e-mailed statement yesterday.
“This is a timely pre-emptive move from the central bank,” Ahmet Akarli, an economist at Goldman Sachs Group Inc. in London said in a note to investors. The central bank is “ensuring that local markets are operational” and banks “have access to ample liquidity.”
In addition they just announced a coupon payment that was due today from JAFZA will be paid as scheduled:
Debt-laden Dubai World's unit Jebel Ali Free Zone Authority, or Jafza, faces on Monday a coupon payment on a 7.5 billion U.A.E dirham ($2.04 billion) Islamic bond in the first key test of whether it will default.
The Islamic bond, or sukuk, was issued in November 2007 through a Cayman Islands-registered company called JAFZ Sukuk Limited and pays 130 basis points over the six-month Emirates Interbank Offered Rate, according to Zawya.com.
The coming coupon payment is estimated to be between AED125 million and AED135 million, according to analyst calculations.
The Islamic bond, or sukuk, was issued in November 2007 through a Cayman Islands-registered company called JAFZ Sukuk Limited and pays 130 basis points over the six-month Emirates Interbank Offered Rate, according to Zawya.com.
The coming coupon payment is estimated to be between AED125 million and AED135 million, according to analyst calculations.
I would guess Abu Dhabi is going to backstop the bank losses as they need the banks to provide lending facilities going forward. However, it appears to me they are "culling" the crap companies from the Dubai portfolio and are going to put the losses on investors in these companies. Selective but actually not a bad strategy at this point.
It will be interesting to see how the DFM does today and how much FDI is removed.
In any case, in my opinion this is a game changer for the future of Dubai. The next 6 months will be VERY interesting.
short flights long nights
Dubai market is down 6% on opening. I think, though I could be wrong, if it drops 10% that trading has to be stopped.
Thread Starter
Join Date: Jan 2000
Posts: 212
Likes: 0
Received 0 Likes
on
0 Posts
Hey, where did my copy of the Times go?
Make you wonder if these clowns will ever learn:
By ANDREW CRITCHLOW
DUBAI -- The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai's debt problems, an executive at the paper said.
The National Media Council ordered the paper blocked by distributors without providing a reason, an executive at the paper in Dubai told Zawya Dow Jones.
The Sunday Times edition available in the U.A.E. on Nov. 29 featured a double-page spread graphic illustrating Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum sinking in a sea of debt. The Times wasn't given a reason for the block, or a timeframe when it will be lifted, the executive said.
A government official in Abu Dhabi, the capital of the U.A.E., said that the picture of Sheik Mohammed, which accompanied a story entitled: The sinking of Dubai's dream, was "offensive."
Under the U.A.E.'s media code, publications are prohibited from criticizing the sheikdom's rulers. Local media and government officials have criticized international press coverage of Dubai's debt crisis. Markets around the world fell last week after the government requested a debt standstill for one of its biggest conglomerates.
Earlier this month Dubai's Sheik Mohammed told reporters gathered at an investment conference in the city to "shut up" and stop criticizing the emirate and its crucial relationship with Abu Dhabi.
Dubai is struggling to deal with it debts estimated to exceed $80 billion.
The Sunday Times is part of News International, a unit of News Corp., owner of Dow Jones & Co. The Times and The Sunday Times are published in the U.A.E. through a local partner SAB Media.
Write to Andrew Critchlow at [email protected]
DUBAI -- The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai's debt problems, an executive at the paper said.
The National Media Council ordered the paper blocked by distributors without providing a reason, an executive at the paper in Dubai told Zawya Dow Jones.
The Sunday Times edition available in the U.A.E. on Nov. 29 featured a double-page spread graphic illustrating Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum sinking in a sea of debt. The Times wasn't given a reason for the block, or a timeframe when it will be lifted, the executive said.
A government official in Abu Dhabi, the capital of the U.A.E., said that the picture of Sheik Mohammed, which accompanied a story entitled: The sinking of Dubai's dream, was "offensive."
Under the U.A.E.'s media code, publications are prohibited from criticizing the sheikdom's rulers. Local media and government officials have criticized international press coverage of Dubai's debt crisis. Markets around the world fell last week after the government requested a debt standstill for one of its biggest conglomerates.
Earlier this month Dubai's Sheik Mohammed told reporters gathered at an investment conference in the city to "shut up" and stop criticizing the emirate and its crucial relationship with Abu Dhabi.
Dubai is struggling to deal with it debts estimated to exceed $80 billion.
The Sunday Times is part of News International, a unit of News Corp., owner of Dow Jones & Co. The Times and The Sunday Times are published in the U.A.E. through a local partner SAB Media.
Write to Andrew Critchlow at [email protected]
Join Date: Feb 2007
Location: i don't know
Posts: 320
Likes: 0
Received 0 Likes
on
0 Posts
by Ali Baba
by grizzled
.
Well, as UBS was going down the drain, it needed 60 billion US. The Swiss governement provided guarantees for that and the bank is afloat again, paying bonusses and now threatening to leave Switzerland because of stricter banking laws (so much for gratitude).
During that time no one was considering Switzerland as going bancrupt, allthough factual owner of a corrupt bank for a limited time.
The same applies here. 60 billion seems like a lot, but its just one company that can be left to die miserably. With empty islands slowly giving themselves back up to the sea as a reminder of local megalomania.
Dubai will survive. It will shrink and its rulers will have to kiss other rulers back sides, but it will survive, because the region can't afford to let it go down. They know they'd join the party sooner than later.
1. Suffering will be burdened on investors of DW, not on the rulers themselves (any one invested in property from Nakheel lately?).
2. The rulers kissed today will be the ones kissing back sides in the future (they are all megalomaniacs and as such incapable of learning)
DUBAI WILL SURVIVE,59$ BILLION IS NOTHING TO DUBAI, keep talking.
Ali Baba,
I take it you're neither an economics major nor a student of history
I take it you're neither an economics major nor a student of history
Well, as UBS was going down the drain, it needed 60 billion US. The Swiss governement provided guarantees for that and the bank is afloat again, paying bonusses and now threatening to leave Switzerland because of stricter banking laws (so much for gratitude).
During that time no one was considering Switzerland as going bancrupt, allthough factual owner of a corrupt bank for a limited time.
The same applies here. 60 billion seems like a lot, but its just one company that can be left to die miserably. With empty islands slowly giving themselves back up to the sea as a reminder of local megalomania.
Dubai will survive. It will shrink and its rulers will have to kiss other rulers back sides, but it will survive, because the region can't afford to let it go down. They know they'd join the party sooner than later.
1. Suffering will be burdened on investors of DW, not on the rulers themselves (any one invested in property from Nakheel lately?).
2. The rulers kissed today will be the ones kissing back sides in the future (they are all megalomaniacs and as such incapable of learning)
