DUBAI: Dubai share prices were battered again in Wednesday trading, falling 6.48 per cent as the Financial Times reported the Gulf emirate is struggling to halt the spread of an alarming debt crisis.
The Dubai Financial Market’s main index was trading down 106.12 points at 1,531.93 shortly after midday (0800 GMT), while the Abu Dhabi Securities Exchange had lost 2.41 per cent to be at 2,477.65 points.
‘The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a 2.0-billion-dollar debt issued by the emirate’s utilities provider,’ said a front-page report in the Financial Times.
‘Dubai Electricity and Water Authority’s 2.0-billion-dollar securitisation programme... 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 4.0-billion-dollar Islamic bond,’ said the report.
Nakheel’s request for a freeze on payments of the Islamic bond, or sukuk, on November 25 raised fears of a debt default by Dubai and sent jitters through financial markets in the United Arab Emirates and around the world.
Dubai’s main DFM index has since plummeted by 26.8 per cent and its Abu Dhabi counterpart has fallen 14.9 per cent over the same period.
On Wednesday Nakheel reported a loss of 13.4 billion dirhams (3.64 billion dollar) for the first half of 2009 compared with the same period last year, after a large writedown of asset values.
Nakheel said revenues had plunged 78.1 per cent in the six months to June 30 to 1.97 billion dirhams (537 million dollars) from 9.0 billion dirhams (2.45 billion dollars) a year earlier.
The developer of the Gulf emirate’s extravagant palm-shaped islands took 12.2 billion dirhams in ‘impairment losses’ stemming from a writedown of land values as the property market in Dubai has plunged in the past year.
Also included are projects the company said would be delayed or scaled down.
‘The management no longer considers these project costs to be fully recoverable,’ it said in the six month report.
Nakheel’s parent, state-owned Dubai World is liable for 59 billion dollars, while the emirate’s overall debts are estimated at 100 billion dollars by ratings agency Moody’s.
And more bad news emerged for another division of Dubai World when its investment arm Istithmar World was forced to give up its W Hotel in New York in a foreclosure auction, according to the Wall Street Journal.
Dubai’s government has said it will not guarantee the debts of Dubai World or Nakheel.
Among the hardest-hit Dubai stocks on Wednesday was giant developer Emaar Properties, which shed 9.86 per cent a day after losing 9.84 per cent, again narrowly missing the maximum-allowed 10-per cent drop. —AFP
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