Dubai World Promises, but the Damage May Be Done
Bailout Comes Too Late as Investors Likely to Be Wary of Taking on Emirate's Debt Again
Dubai World's promise to repay Nakheel's debt and a separate move by the emirate to set out a legal framework for future talks may not be enough to repair the damage to Dubai's reputationamong international investors over the handling of its debt restructuring, investors and observers said.
While Dubai's moves go a long way toward restoring confidence, they aren't "a magical pill that will clear the air and erase the confusion," said Jawad Ali, a partner at law firm King & Spalding in Dubai, which represents at least one Dubai World creditor.
Sheik Ahmed bin Saaed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee, in a statement said that Monday's actions were taken to reassure investors and others that "our government will act at all times in accordance with market principles and internationally accepted business practices."
On Monday, Abu Dhabi agreed to provide Dubai $10 billion to settle some of Dubai's obligations, including a $4.1 billion debt payment related to an Islamic bond, or sukuk, that matured Monday. (Abu Dhabi and Dubai are the two biggest emirates of the United Arab Emirates. Abu Dhabi, one of the world's biggest oil producers, serves as the federation's capital.)