DUBAI: Dubai has reached agreement on rolling over $10 billion in debt extended by the central bank of the United Arab Emirates during the global financial crisis, sources familiar with the matter told Reuters on Wednesday.
The emirate borrowed the money five years ago and the debt is due to mature next month. It helped Dubai and its state-linked companies avoid default during the crisis, when the emirate's real estate market crashed and loan markets froze.
"The deal is done," one source said, declining to be named because the matter has not been formally announced.
"The debt will be rolled over at better terms," he added, without giving details of the terms or saying for what period the debt would be rolled over.
The previous bonds carried a 4 percent coupon.
Official spokesmen and other central bank and government officials in the UAE declined to comment or were unavailable to comment.
The debt had been widely expected to be rolled over; while Dubai is now recovering strongly from its crisis, thanks to a resurgent real estate market and booming trade and tourism industries, it still faces major liabilities in coming years.
According to the International Monetary Fund, about $78 billion of debt held by Dubai and its state-linked entities will come due between 2014 and 2017.
Much of this is the legacy of the crisis: payments agreed between the emirate and its lenders under multi-billion dollar debt restructurings for its state-linked conglomerates, such as a $25 billion debt reorganisation by Dubai World.
In November, the Dubai government will face the maturity of as much as $10 billion of five-year bonds and sukuk which two Abu Dhabi banks, National Bank of Abu Dhabi and Al Hilal Bank agreed to buy from the emirate as part of the crisis aid.
The banks have not said how this debt will be handled, but many in the markets expect it to be wholly or partly rolled over. (Reuters)