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Dubai World creditors expect request for a standstill agreement at meeting

Bankers expect Dubai World to make a formal request for a standstill on its $26bn (£16.1bn) debt at today’s creditor meeting, but it could be more than a month before banks agree, bankers have revealed.

Banks are expected to support Dubai World’s request, but what happens next will depend on the information they receive about the health of its finances, as the scale and complexity of the restructuring and its political overtones put creditors in uncharted territory.

“You can’t bet on it, because anything could happen; it could be anything from a complete write-off to 100 per cent recovery,” a senior banker said.

Dubai's $10bn bailout from neighbouring Abu Dhabi, the richest of the United Arab Emirates, will be used to keep Dubai World’s debt payments current, but a person with knowledge of the situation said these funds were contingent upon creditors reaching a sensible standstill agreement.

The emirate’s new bankruptcy law, introduced by decree this week, could provide additional incentive to strike a deal.