Dubai World Debt Saga Climax Expected This Week

Local bourses expected to rally once Dubai World debt episode comes to an end.

International banks and creditors are bracing themselves for announcements this week that could spell the beginning of the end for the long-running Dubai World debt saga.

News is surfacing that the government-owned conglomerate will present a deal in the next couple of days that would draw a line under its controversial $26bn debt restructuring plan.

“The market is expecting news this week and they’re expecting it to be good,” Mohieddine Kronfol, managing director at Algebra Capital, told newswire Zawya.

Dubai World may offer creditors a full repayment delayed over eight years, The Sunday Times reported.

The deal will reveal how $22bn of existing debt and $4bn owed to Dubai government will be repaid.

Meanwhile, Dubai’s main benchmark index traded narrowly down on Monday, with traders saying clients were waiting for Dubai World’s terms to be made public before placing big bets. The market has surged 11 per cent this month on speculation a proposal is imminent.

A team of advisers headed by Aidan Birkett of Deloitte and New York-based investment bankers Moelis & Company has laboured over how to restructure Dubai World’s debt pile for months.

A decision this week is likely to set the tone for sentiment in the emirate for markets in the near future, while fundamental questions about the length of the complex restructuring will linger.

It is almost four months to the day since the Dubai World roiled markets by announcing the need for a standstill.