Dubai markets fall on debt worries

Share prices on Dubai's stock market have fallen to their lowest level in almost a year, a day after the country’s investment arm lost a New York luxury hotel in a foreclosure auction. 

• The Dubai Financial Market closed down 6.39 per cent in early trading on Wednesday, while the securities exchange in neighbouring Abu Dhabi fell 2.82 per cent.
• Istithmar World, Dubai’s investment company, said on Wednesday that the restructuring of Dubai World, its parent company, was not connected to its loss of the W Hotel in Manhattan in an auction on Tuesday.
• “We are disappointed that the lender has chosen this route as we felt that real progress was being made in negotiations with the various lenders to restructure the debt of W Union Square for the future,” a spokesman at Istithmar World said.
• “We are disappointed that the lender has chosen this route as we felt that real progress was being made in negotiations with the various lenders to restructure the debt of W Union Square for the future,” a spokesman at Istithmar World said.
• “This is totally unconnected to the restructuring of the debt of Istithmar parent Dubai World. Istithmar World is not included in that process.”

  Nakheel losses

• The investment company lost the hotel for $2m, after buying the property for $282m in 2006, the Wall Street Journal reported.
• Dubai World, a state-owned holding company, said on November 30 that Istithmar World was among several of its units that would not be part of its $26bn debt restructuring programme.
• Global stock markets fell a fortnight ago on news that Dubai World was not able to repay its debts on time.
• The Dubai and Abu Dhabi bourses also reacted negatively to a document released by Bloomberg on Tuesday which showed that Nakheel, a property developer owned by Dubai World, posted a loss of 13.4 billion dirhams ($3.65 billion), in the first half of the year.
• The losses come after Nakheel wrote down the value of land and property, the document said.

  ‘Junk’ bonds

• Six other state-owned companies had their bonds rating downgraded to ‘junk’ status on Tuesday by Moody’s credit agency, meaning that they have far fewer options to pay off their mounting debts.
• The targeted firms include DP World, the biggest ports operator in the Middle East, Dubai Electricity and Water Authority, and Jebel Ali Free Zone, a business developer centre.
• Dubai Holding Commercial Operations Group, Emaar Properties and DIFC Investments were also downgraded.
• The decision by Moody’s follows a move by Standard & Poor’s to cut the credit ratings of six Dubai government-linked companies – including DP World – to junk status.
   
  Standard & Poor’s also lowered its ratings on four Dubai-based banks to junk status because of their large exposures to companies such as Dubai World and Nakheel.