THE SUNDAY TELEGRAPH: Sheikh Mohammed of Dubai is under mounting pressure to explain the emirate’s debt problems, after Abu Dhabi indicated that it will not write a blank cheque to bail out its neighbour.
According to officials, Abu Dhabi, the richest state in the United Arab Emirates, will be cautious about how and whether to assist Dubai World, the state holding company that this week suspended repayments on a $3.5bn (£2.1bn) Islamic bond due in mid-December.
Any sign that Abu Dhabi’s support may not yet be secured could push global markets further into turmoil tomorrow, analysts said, especially if Dubai’s ruler maintains his silence on the crisis beyond this weekend’s Eid religious holiday. Sources said he may be forced to disrupt the 10-day Islamic break to make a statement as early as tomorrow.
“We will look at Dubai’s commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts,” a senior Abu Dhabi official said.
“Until things become clearer, it is very difficult to make any further investment decision on the bonds. Many things have to be clarified by Dubai.”
Dubai World’s $59bn of liabilities make up the majority of the emirate’s total $80bn debts. >>> Rowena Mason and Louise Armitstead | Sunday, November 29, 2009