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.