Abu Dhabi gives Dubai $10 bn in surprise aid

vIndianz.com (14 Dec, 2009) — Abu Dhabi stepped in to assist fellow United Arab Emirates member Dubai with a $10 billion injection, of which $4.1 billion was allocated to distressed state-owned conglomerate Dubai World to recompense immediate obligations, Dubai said on Monday.

economy The move was the least anticipated of all options Dubai had on the table after requesting a standstill on $26 billion in Dubai World debt on November 25, upsetting markets and shuddering the image of the emirate as a regional business hub.

“The government of Abu Dhabi has decided to finance $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of forthcoming obligations on Dubai World,” the chairman of the Dubai Supreme Fiscal Committee said in a statement.

“As a first act for the latest fund, the government of Dubai has authorized $4.1 billion to be used to pay the sukuk obligations that are outstanding today.”

The yen fell harshly against other currencies on the news, whereas the dollar shot up to 88.90 yen and the euro too jumped to 130.43 yen.

S&P futures jumped to be up 0.7 per cent, reversing early losses and pushing Treasury futures to session lows.

Hong Kong’s Hang Seng index shot up 300 points in the last minutes of morning trade to come to an end in positive territory, while other markets across Asia also pushed higher.

Abu Dhabi is the largest member of the United Arab Emirates federation and a big oil exporter.

“We are here at present to restore confidence of investors, financial and trade creditors, employees, and our citizens that our government will take action at all times in accordance with market principles and globally accepted business practices,” Sheikh Ahmed bin Saaed al-Maktoum said in the statement.

“Dubai is, and will maintain to be, a strong and lively global financial center. Our best days are yet to come.” surplus funds would be used to provide to Dubai Worlds needs up until the end of April 2010, the statement said.

Dubai has announced a bankruptcy law that it said could be used in case Dubai World and creditors failed to arrive at an agreement on debt maturing in the future.

“Dubai will declare an all-inclusive reorganization law, a framework that is based upon globally accepted standards for transparency and creditor protection,” Sheikh Ahmed said.

“This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.”

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