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Brendan R
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In the FT, it is mentioned at the bottom of the article... another bad news... :ahhhhh:
Tuesday Dec 8 2009
All times are London time
Dubai utility faces $2bn debt demand
By Robin Wigglesworth in Abu Dhabi, Anousha Sakoui in London and Simeon Kerr in Dubai
Published: December 8 2009 22:29 | Last updated: December 8 2009 22:29
The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a $2bn debt issued by the emirate’s utilities provider.
Dubai Electricity and Water Authority’s $2bn securitisation programme, Thor Asset Purchase Company, an instrument originally maturing in 2036, may have to be redeemed in full on December 14 – the day Dubai World’s property developer, Nakheel, is due to redeem a $4bn Islamic bond, or sukuk.
The payment acceleration underlines how Dubai’s attempts to restructure $26bn of debts at the Dubai World conglomerate is spreading to other, healthier parts of the economy.
The Dubai Financial Market fell a further 6.1 per cent and the cost of insuring Dubai debt against default rose sharply. Gains of 22 per cent this year have been wiped out in four brutal trading sessions.
Government officials have been eager to distance themselves from the debts of Dubai World. But DEWA, the emirate’s only utility provider, enjoys explicit government backing and a sovereign guarantee.
The utility is seen as one of the emirate’s more solid companies, with healthy cash flows, and analysts expect the repayment to be met or renegotiated. Dubai’s department of finance said: “DEWA is a government company. Its debt is sovereign and the government remains 100 per cent committed to meeting its sovereign debt obligations.”
Fitch was the first to downgrade the Thor instrument on November 30 to below the single A grade, triggering the payment acceleration, but has kept it at BBB-, or investment grade.
“The economic uncertainty in Dubai has soured our view of the sovereign capacity to meet its commitments,” said Jaime Sanz, Fitch’s head of emerging markets structured finance. “The creditors can agree to a waiver on the acceleration, but whether it constitutes a default depends on the terms.”
Other rating agencies have downgraded Thor to junk grade. Moody’s moved DEWA to Ba2 from Baa2 on “liquidity pressure due to the triggering of an acceleration clause”.
The three holders of the instrument are understood to be interested in waiving the acceleration. Standard & Poor’s warned this could amount to a default.
Dubai has this year raised $15bn from the central bank of the United Arab Emirates and two Abu Dhabi-based banks.
Nakheel's problems were compounded by research from Fugro, a surveying company, suggesting that its crown jewel, Palm Island, is sinking 5mm a year, posing a flooding risk. Nakheel questioned the accuracy of this research.
Tuesday Dec 8 2009
All times are London time
Dubai utility faces $2bn debt demand
By Robin Wigglesworth in Abu Dhabi, Anousha Sakoui in London and Simeon Kerr in Dubai
Published: December 8 2009 22:29 | Last updated: December 8 2009 22:29
The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a $2bn debt issued by the emirate’s utilities provider.
Dubai Electricity and Water Authority’s $2bn securitisation programme, Thor Asset Purchase Company, an instrument originally maturing in 2036, may have to be redeemed in full on December 14 – the day Dubai World’s property developer, Nakheel, is due to redeem a $4bn Islamic bond, or sukuk.
The payment acceleration underlines how Dubai’s attempts to restructure $26bn of debts at the Dubai World conglomerate is spreading to other, healthier parts of the economy.
The Dubai Financial Market fell a further 6.1 per cent and the cost of insuring Dubai debt against default rose sharply. Gains of 22 per cent this year have been wiped out in four brutal trading sessions.
Government officials have been eager to distance themselves from the debts of Dubai World. But DEWA, the emirate’s only utility provider, enjoys explicit government backing and a sovereign guarantee.
The utility is seen as one of the emirate’s more solid companies, with healthy cash flows, and analysts expect the repayment to be met or renegotiated. Dubai’s department of finance said: “DEWA is a government company. Its debt is sovereign and the government remains 100 per cent committed to meeting its sovereign debt obligations.”
Fitch was the first to downgrade the Thor instrument on November 30 to below the single A grade, triggering the payment acceleration, but has kept it at BBB-, or investment grade.
“The economic uncertainty in Dubai has soured our view of the sovereign capacity to meet its commitments,” said Jaime Sanz, Fitch’s head of emerging markets structured finance. “The creditors can agree to a waiver on the acceleration, but whether it constitutes a default depends on the terms.”
Other rating agencies have downgraded Thor to junk grade. Moody’s moved DEWA to Ba2 from Baa2 on “liquidity pressure due to the triggering of an acceleration clause”.
The three holders of the instrument are understood to be interested in waiving the acceleration. Standard & Poor’s warned this could amount to a default.
Dubai has this year raised $15bn from the central bank of the United Arab Emirates and two Abu Dhabi-based banks.
Nakheel's problems were compounded by research from Fugro, a surveying company, suggesting that its crown jewel, Palm Island, is sinking 5mm a year, posing a flooding risk. Nakheel questioned the accuracy of this research.
