DUBAI: Dubai Group has signed a $10bn debt restructuring deal, two sources with knowledge of the matter told Reuters, marking the end of a perilous period which saw the emirate risk collapse under a mountain of debt obligations.
The unit of Dubai Holding, the investment vehicle of Dubai’s ruler, was one of a number of state-linked entities which borrowed heavily from banks to fund an acquisitions spree during the boom years of 2006-08.
But as credit markets dried up following the global financial crisis and a local real estate bubble burst, they found themselves unable to manage their obligations and were forced to renegotiate tens of billions of dollars of debt.
Dubai Group finally brought an end to more than three years of negotiations about its debt pile when it signed the restructuring deal on Wednesday, the sources said, speaking on condition of anonymity as the information is not public.
Its lenders, which include France’s Natixis and Dubai’s Emirates NBD, still have to sign and return the last piece of documentation and this should happen in the next few days, bringing a formal conclusion to the long-awaited deal, the sources said on Thursday.
“It’s not perfect but it’s a major milestone for both the emirate and the banks who were exposed to the Dubai government-related entities,” said one of the sources at a creditor bank. Dubai Group declined to comment.
Concluding a deal would allow Dubai to put behind it a period which led to a $20bn bailout from Abu Dhabi and questions over the city-state’s economic viability, with the focus now on advancing the economy and generating the revenues to meet revised debt schedules and fund new mega-projects. Reuters
