DUBAI (Zawya Dow Jones)--Government-owned Dubai World holds almost $60 billion in liabilities on its balance sheet, raising concerns that the sheikdom's debts may be far greater than initially thought, recent figures show.
At the end of last year, the conglomerate had 217.8 billion U.A.E. dirhams ($59.1 billion) in liabilities against AED365.8 billion in assets, according to a statement posted on NASDAQ Dubai's Web site on July 31.
The figures may indicate that the total debt held by Dubai and its government-related entities greatly exceeds the official $80 billion announced last year when the emirate started to come to terms with the global financial crisis.
"The $60 billion is very large and raises concerns and questions," said Fahd Iqbal, an analyst at investment bank EFG-Hermes, adding that it's difficult to judge the impact that the consolidated figures will have on the emirate's total debt position.
The term liability refers to a company's legal debts or obligations arising from its business operations. A detailed breakdown of Dubai World's liabilities wasn't provided in the statement to the bourse by its real estate unit Nakheel. NAKHEEL BOND
Nakheel was forced to reveal details of its mother company as part its obligations on a $3.5 billion sukuk due in December. Whether the bonds are refinanced or paid off, is weighing heavily on the minds of analysts rating Dubai's government-owned companies.
"The fact that the government is not sending a message of unambiguous support for Nakheel raises doubt in the market regarding the extent to which the government will relieve investors of the substantial refinancing risks of Dubai Inc. generally," said Farouk Soussa, an analyst with ratings agency Standard & Poors, which recently downgraded the credit worthiness of a number of Dubai government-controlled companies.
Both Nakheel and Dubai World declined to comment further on the July 31 disclosure when contacted by Zawya Dow Jones.
Nakheel, which has $80 billion of projects underway in Dubai including the iconic palm-tree-shaped archipelagos, has been hit hard by a near 50% drop in property prices in the emirate. It is entangled in a growing number of disputes over unpaid bills to foreign contractors.
In May, Nakheel said it received funds from the $10 billion that Dubai borrowed from the Abu Dhabi-based central bank. The company declined to say how much funding it got, but analysts at the time put the figure at AED2 billion.
Dubai is planning to raise the second $10 billion tranche of the bond later this year and has set up a support fund to distribute money raised from the bond.
SCALING BACK
Government-owned companies in Dubai are under pressure to restructure as the emirate struggles to bolster an economy that's being hit hard by the global financial crisis and rising costs of financing a mounting debt pile.
Dubai World is just one part of the extended business empire of the emirate's ruler Sheikh Mohammed bin Rashid Al Maktoum that encompasses activities including banking, hotels, airlines and property.
The company, whose interests include ports, real estate and leisure, had AED52.3 billion in revenue last year, the regulatory filing shows.
As the global financial downturn continues to impact Dubai World at home, the conglomerate is reviewing its overseas projects.
On Wednesday, Malaysian power producer and port operator MMC Corp. (MMC CORP.BHD) said Dubai World was reconsidering its investment in a 16 billion ringgit ($4.5 billion) planned maritime center.
Earlier this month, it said it was putting on hold some of its billions of dollars worth of planned investments in Africa due to the downturn.
Source: The wall street journal
At the end of last year, the conglomerate had 217.8 billion U.A.E. dirhams ($59.1 billion) in liabilities against AED365.8 billion in assets, according to a statement posted on NASDAQ Dubai's Web site on July 31.
The figures may indicate that the total debt held by Dubai and its government-related entities greatly exceeds the official $80 billion announced last year when the emirate started to come to terms with the global financial crisis.
"The $60 billion is very large and raises concerns and questions," said Fahd Iqbal, an analyst at investment bank EFG-Hermes, adding that it's difficult to judge the impact that the consolidated figures will have on the emirate's total debt position.
The term liability refers to a company's legal debts or obligations arising from its business operations. A detailed breakdown of Dubai World's liabilities wasn't provided in the statement to the bourse by its real estate unit Nakheel. NAKHEEL BOND
Nakheel was forced to reveal details of its mother company as part its obligations on a $3.5 billion sukuk due in December. Whether the bonds are refinanced or paid off, is weighing heavily on the minds of analysts rating Dubai's government-owned companies.
"The fact that the government is not sending a message of unambiguous support for Nakheel raises doubt in the market regarding the extent to which the government will relieve investors of the substantial refinancing risks of Dubai Inc. generally," said Farouk Soussa, an analyst with ratings agency Standard & Poors, which recently downgraded the credit worthiness of a number of Dubai government-controlled companies.
Both Nakheel and Dubai World declined to comment further on the July 31 disclosure when contacted by Zawya Dow Jones.
Nakheel, which has $80 billion of projects underway in Dubai including the iconic palm-tree-shaped archipelagos, has been hit hard by a near 50% drop in property prices in the emirate. It is entangled in a growing number of disputes over unpaid bills to foreign contractors.
In May, Nakheel said it received funds from the $10 billion that Dubai borrowed from the Abu Dhabi-based central bank. The company declined to say how much funding it got, but analysts at the time put the figure at AED2 billion.
Dubai is planning to raise the second $10 billion tranche of the bond later this year and has set up a support fund to distribute money raised from the bond.
SCALING BACK
Government-owned companies in Dubai are under pressure to restructure as the emirate struggles to bolster an economy that's being hit hard by the global financial crisis and rising costs of financing a mounting debt pile.
Dubai World is just one part of the extended business empire of the emirate's ruler Sheikh Mohammed bin Rashid Al Maktoum that encompasses activities including banking, hotels, airlines and property.
The company, whose interests include ports, real estate and leisure, had AED52.3 billion in revenue last year, the regulatory filing shows.
As the global financial downturn continues to impact Dubai World at home, the conglomerate is reviewing its overseas projects.
On Wednesday, Malaysian power producer and port operator MMC Corp. (MMC CORP.BHD) said Dubai World was reconsidering its investment in a 16 billion ringgit ($4.5 billion) planned maritime center.
Earlier this month, it said it was putting on hold some of its billions of dollars worth of planned investments in Africa due to the downturn.
Source: The wall street journal
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