U.A.E. Speaks On Dubai, But Offers No Direct Support On Dubai World Debt
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Worries are arising between Dubai and The United Arab Emirates about a possible rift as the U.A.E. central bank did not offer specific support for the struggling city-state when it said Sunday that funding would be made available to local banks as needed.
This comes after Dubai said Wednesday that it will seek to delay debt payments for Dubai World. This statement from Dubai spawned a concern in the markets last week as the main investment firm of the Persian-Gulf state asked to defer debt repayments for six months totaling $60 billion.
The move came as the city-state's banking sector, specifically Dubai World, appeared to have rising confidence. According to those familiar with the matter, there had been no internal announcement, and in fact the move came as a complete surprise to federal officials, bondholders and some executives with in the bank.
In a statement the central bank said that it "stands behind" and would make funds available to banks in the U.A.E., including local subsidiaries of foreign banks. The statement did not specifically mention the current issues plaguing Dubai, leaving market observers disappointed.
The central bank could possibly still relay another message that there will be specific support for Dubai in the immediate future.
Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum, in a statement earlier this month said that the prospects for the economy in Dubai are optimistic.
According to reports from Reuters Monday, the Dubai government said it will not guarantee Dubai World's debts, and creditors will be affected in "the short term" by the conglomerate's restructuring. Abdulrahman al-Saleh, director general of Dubai's department of finance, also said market reaction to Dubai World's announcement last week was exaggerated and did not match the extent of the conglomerate's woes.
This comes after Dubai said Wednesday that it will seek to delay debt payments for Dubai World. This statement from Dubai spawned a concern in the markets last week as the main investment firm of the Persian-Gulf state asked to defer debt repayments for six months totaling $60 billion.
The move came as the city-state's banking sector, specifically Dubai World, appeared to have rising confidence. According to those familiar with the matter, there had been no internal announcement, and in fact the move came as a complete surprise to federal officials, bondholders and some executives with in the bank.
In a statement the central bank said that it "stands behind" and would make funds available to banks in the U.A.E., including local subsidiaries of foreign banks. The statement did not specifically mention the current issues plaguing Dubai, leaving market observers disappointed.
The central bank could possibly still relay another message that there will be specific support for Dubai in the immediate future.
Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum, in a statement earlier this month said that the prospects for the economy in Dubai are optimistic.
According to reports from Reuters Monday, the Dubai government said it will not guarantee Dubai World's debts, and creditors will be affected in "the short term" by the conglomerate's restructuring. Abdulrahman al-Saleh, director general of Dubai's department of finance, also said market reaction to Dubai World's announcement last week was exaggerated and did not match the extent of the conglomerate's woes.
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