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Dubai Shares Drop Most in Week After Moody’s Dubai World Report |
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February 23rd, 2010 |
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Dubai’s measure declined the most in more than a week after Moody’s Investors Service said United Arab Emirates banks are owed about 55 billion dirhams ($15 billion) by Dubai World.
Emirates NBD PJSC, the U.A.E.’s largest bank, dropped to the lowest level in almost two weeks. Dubai Islamic Bank, the nation’s biggest bank complying with Islamic banking rules, fell the most in more than a week. Emaar Properties PJSC retreated for a second day. The Dubai Financial Market General Index dropped 1.8 percent to 1,593.29 at 1:28 p.m. in the emirate, the lowest level since Feb. 1.
The possibility that U.A.E. banks will be forced to accept less than they are owed will hurt their ability to borrow money at attractive rates, the Moody’s report yesterday said, adding that they “are in a position to weather sizeable haircuts.” Gulf region banks are poised for “another difficult year,” Standard & Poor’s said, as they grapple with bad loans and the fall-out from the credit crisis.
“The fear is that the banking sector will not be able to lend and that means sell real estate and sell banks,” said Akram Annous, deputy fund manager at Al Mal Capital PSC in Dubai. “The market view is that the longer the payback period, and the deeper the haircut, the worse the situation is.”
Dubai World may offer its creditors 60 cents on the dollar after seven years, Zawya Dow Jones news service said Feb. 14, citing unidentified people familiar with the plan. A spokeswoman for the emirate said that day no such offer had been made.
All restructuring options are being considered, including swapping Nakheel PJSC’s $1.73 billion bonds with new securities, a person close to the Dubai government said Feb. 17. Dubai World will present a proposal to creditors in March to restructure about $22 billion of debt after its advisers complete valuing the assets of the state-owned company, the person said.
Dubai World announced plans to alter terms on about $26 billion of debt Dec. 1, roiling global financial markets.
Emirates NBD fell 4.3 percent to 2.49 dirhams, the lowest intraday level since Feb. 10. Dubai Islamic Bank dropped 1.7 percent, the most this week, to 2.27 dirhams. Emaar, Dubai’s largest developer, lost 2 percent to 2.95 dirhams.
The Bahrain All Share Index retreated 0.6 percent, Kuwait’s measure fell 1 percent and Qatar’s gauge declined 1.1 percent. Saudi’s Tadawul All Share Index and the Abu Dhabi index lost less than 0.1 percent yesterday. The Muscat Securities Market 30 Index gained 0.2 percent.
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Source: www.businessweek.com |
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