Dubai In Danger? (12/14: $10B from Abu Dhabi)

[randallscott35]

Not looking good for this country at all. Building skyscrapers in the desert maybe wasn't the best plan. Maybe they just need slot money for the purses?

http://www.bloomberg.com/apps/news?p...d=aRsjlClzl500

[philcski]

Originally Posted by randallscott35

Not looking good for this country at all. Building skyscrapers in the desert maybe wasn't the best plan. Maybe they just need slot money for the purses?

http://www.bloomberg.com/apps/news?p...d=aRsjlClzl500

It's all good. There's no penalty for late payment according to the rules of Shariah in Fiqh al-Muamalat. Now they just need to convince the rest of the banking world of this.

[randallscott35]

Piece of cake.

[randallscott35]

Emirate has a lot of explaining to do
By Roula Khalaf, Middle East Editor, Financial Times

It came in a short statement about the restructuring of Dubai World, one of the emirate’s biggest and best-known companies, with the big news buried near the end. But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come. For months, all indications in Dubai were that the heavily indebted city-state, symbol of the rise of the region as an economic powerhouse as much as of the excesses of the pre-financial crunch days, would meet the obligations of the companies in which it has stakes, and that Nakheel’s $4bn debt due in December would be repaid. Only a few weeks ago, bankers in the region were so upbeat some had suggested that Dubai might not even need to raise more funds to pay debts due this year. It helped of course that the emirate was showing signs of recovery, with fewer expatriates packing their bags than expected, retail sales on the rise and the real estate sector beginning to stabilise. The government itself looked confident too, raising $2bn in Islamic bonds last month.

As always, though, the problem in Dubai is that no one had all the facts, and perhaps some in the financial community had made all the wrong assumptions. The whole affair, one analyst told me on Thursday, was “typical of the way things work in Dubai – top down and in a vacuum – and that makes it very difficult for investors”. True, top officials had indicated repeatedly that Dubai would not default on its debt – and Nakheel, the Palm real estate developer, was assumed to be too important for Dubai’s image. But officials did not explicitly say that the repayments would be made on time. Moreover, the recent prospectus to test market appetite for government bonds said the government was “not legally obliged” to meet the obligations of related entities – what is commonly referred to as Dubai Inc – but might at its sole discretion decide to extend such support. Most of the funds raised in the past year – including from Abu Dhabi banks on Wednesday – were by the government itself, rather than individual companies.

So what was Sheikh Mohammed bin Rashid, Dubai’s ruler, up to on Wednesday? Was he indicating, as some suggest, that the government would allow Dubai’s bad companies to suffer in order to save the good ones? Was he simply trying to force the hand of the Dubai World bondholders to buy some time and leave open the option of repaying the debt next month if he had to? Perhaps Dubai is convinced that as the government of the emirate raises fresh funds and restructures companies related to it, the emirate is consolidating its creditworthiness. Farouk Soussa of Standard & Poor’s says that lending to the government now arguably becomes less risky because it is putting the funds to better use. But he also says this is cancelled out by the lack of transparency.

Whatever the Dubai ruler’s intention, the way Dubai has gone about its financial business has hugely damaged its standing. Bankers and investors are furious, feeling they were led on the wrong path. Analysts, meanwhile, have been scrambling to reconsider the assessments they had recently made about Dubai. The assumption that Abu Dhabi would always stand by Dubai and its flagship companies is now suddenly seen as unsustainable. Was this perhaps Abu Dhabi’s way of taking its revenge on Dubai for the excesses of the boom years? I doubt it. The rivalry between the two emirates is less important than the implications of Dubai unravelling. The cost of insuring Abu Dhabi debt went up on the Dubai announcement.

It has to be remembered that many of Abu Dhabi’s companies are exposed to Dubai, having been some of the most enthusiastic investors. Whatever Dubai is up to, assuming there is some big strategy, it should have explained itself before raising the prospect of default – and it needs to do a lot more explaining now.

[Arletta]

http://abcnews.go.com/Video/playerIndex?id=2688465

[dalakhani]

Originally Posted by philcski

It's all good. There's no penalty for late payment according to the rules of Shariah in Fiqh al-Muamalat. Now they just need to convince the rest of the banking world of this.

the Cds issuers are probably on suicide watch. What do you think philly? 10-1 or worse?

Am I going too far when I say that looking down the road that this could be a really great thing for horse racing?

[GBBob]

Originally Posted by dalakhani

the Cds issuers are probably on suicide watch. What do you think philly? 10-1 or worse?

Am I going too far when I say that looking down the road that this could be a really great thing for horse racing?

I understand what you are saying, but I'm not sure I agree. Losing or minimizing the influx of money they bring can't help I don't think.

[chucklestheclown]

If you are looking that far ahead you are a true optimist. Randall, would you be so kind as to explain the exact make-ups of Dubai, Abu Dhabi, Dubai World and DP World? (I'm bored).

[Gander]

Who cares, the race is now on poly. Another meaningless big dollar race.

[johnny pinwheel]

Originally Posted by Gander

Who cares, the race is now on poly. Another meaningless big dollar race.

agreed, what are we going to do? send grass horses? maybe zenyatta. the world cup is going to be dreadful anyway.

[SCUDSBROTHER]

Give the bankers n' investors some of that Mo Nut Liquor.

[PatCummings]

It all could mean REALLLLLLLLLY bad things for Kentucky.

But, overall, the short-term reaction of the US markets, as of today, was similar to a punch in the face that you saw coming but couldn't really stop. I would even say that Dubai may have needed this knock down to change some of their financial ways.

All that being said - I think they emerge better as a result of this - the global investment community will demand it of them.

And I STRONGLY doubt anything changes with the 2010 Dubai World Cup.

[PatCummings]

Originally Posted by randallscott35

Not looking good for this country at all. Building skyscrapers in the desert maybe wasn't the best plan. Maybe they just need slot money for the purses?

http://www.bloomberg.com/apps/news?p...d=aRsjlClzl500

And for the record, Dubai is an emirate within the UAE, not its own country. Similar to California not being a country of its own, but a state within a country.

[10 pnt move up]

Originally Posted by PatCummings

And for the record, Dubai is an emirate within the UAE, not its own country. Similar to California not being a country of its own, but a state within a country.

wow, interesting....and kinda like California the government in that state (emirate) is doing its best to go under by spending too much.

Yeah they'll be stronger after this...or they'll be Iceland Part II. Either or.

[2Hot4TV]

Originally Posted by 10 pnt move up

wow, interesting....and kinda like California the government in that state (emirate) is doing its best to go under by spending too much.

That's the way I see it. Thanks Arnold.

[10 pnt move up]

Originally Posted by 2Hot4TV

That's the way I see it. Thanks Arnold.

Can Arnold (quasi-democrat) do anything other than hope the libs in Sacramento vote to cut spending? Or they could raise taxes again I suppose, might as well raise win take out to 20%, everyone needs to do their part.

[GenuineRisk]

Originally Posted by 10 pnt move up

Can Arnold (quasi-democrat) do anything other than hope the libs in Sacramento vote to cut spending? Or they could raise taxes again I suppose, might as well raise win take out to 20%, everyone needs to do their part.

California's problems date back much farther than Ah-nuld- all the way to 1978 and Prop 13, which allows progress to be held up by a minority of representatives.

[tector]

I have never understood racing's fascination with, or kowtowing to, these criminals, other than pure greed, which pretty explains it all. Dubai is and always has been a criminal state:

http://www.huffingtonpost.com/johann..._b_372795.html

Just as Switzerland had no qualms laundering the money (and stolen jewels and artwork, and ripped-out gold fillings) of the Nazis, so too have these dirtbags been happy banking the money of terrorists and tyrants for decades. But in our typical American way (easily adopted by the Euros) of finding that "wealth covers all sins", we have venerated these scoundrels into "racing's royalty".

I hope the whole place goes down in flames.

[10 pnt move up]

Originally Posted by GenuineRisk

California's problems date back much farther than Ah-nuld- all the way to 1978 and Prop 13, which allows progress to be held up by a minority of representatives.

before my time but I will do a google stalk to find out about it...I think California should be a great lesson the rest of the country about too many social programs and high taxes.