Dubai World gets $9.5 B bailout
The Dubai government announced plans Thursday to inject $9.5 billion in funding to help out its state-owned holding company, Dubai World.
Dubai World shocked investors around the world in November when it asked for a freeze on payments owed on its $23.5 billion in debts.
Of the $9.5 billion infusion announced Thursday, the lion’s share — $8 billion — will go toward full repayment of bonds belonging to Dubai World’s property development arm, Nakheel.
The government did not address the rest of the outstanding debt: $14.2 billion. It said creditors may have to wait five to eight years for the amount to be paid out in full.
Dubai said that $5.7 billion of the announced infusion is leftover money from a $10 billion loan from the neighboring emirate, Abu Dhabi.
The remainder of the money — $3.8 billion — will come from “internal government resources,” Dubai said without elaborating.
The plan does not include any additional funding from the federal government.
The Dubai Financial Market shot up more than 4% as it regarded the announcement as a positive step.
Dubai is the most populous of the seven emirates that comprise the United Arab Emirates. Its holding company, Dubai World, is at the center of Dubai’s thrust to diversify its economy into property, leisure and investment.
Its best known arm is Nakheel, the property developer behind the Palm Jumeirah and World archipelagos of man-made islands built for the super-rich.
When Dubai World asked for a freeze on debt payment in November, it delivered a cold dose of reality to speculators worldwide who believed the oil rich region was impervious to the global financial crisis.