Dubai shares take a hit on debt repayment fears

City A.M. Reporter
DUBAI’S handling of the debt crisis at flagship Dubai World will affect its ability to attract future investment, business secretary Peter Mandelson said yesterday, amid a report the firm may offer creditors just 60 cents in the dollar.

Mandelson said the Gulf Arab emirate, which shocked global markets in November with plans to delay repayment on $26bn (£16.6bn) in debt, must reach a “demonstrably fair” deal with creditors.

Dubai denied a report that it is mulling a two-part deal, including one that may repay lenders 60 percent over seven years. The report itself sparked a sell-off on Dubai markets, with shares falling more than three per cent yesterday.

“Dubai has to be conscious of the fact that how it resolves its current problems will mean a great deal for the Dubai brand, its reputation and how it secures investment from overseas in the future,” Mandelson told a British business group meeting in the Gulf Arab emirate. Dubai World is in talks with banks on the debt delay -- about $22bn linked to its main property units Nakheel and Limitless World -- but has yet to present a formal proposal. It staved off default on a $4.1bn Islamic bond linked to Nakheel, after a last minute bailout from Abu Dhabi in December.