CITI Bank Loans to Dubai Raise the Possibility of Future Economic Trouble For the Emirate
Take a careful look at this article from the WSJ from this week.
With questions about Dubai’s looming debt obligations swirling, Citigroup Inc said it had raised $8 billion for the Persian Gulf city-state over the course of the past year and still had a positive outlook on its economy.
CitigroupChairman Win Bischoff was quoted in the bank’s statement Monday as saying Citigroup continues to see Dubai as among its “most significant markets.”
“This is in line with our commitment to the [United Arab Emirates] market in general, and reflects our positive outlook on Dubai in particular,” the statement quoted Mr. Bischoff as saying.
Dubai’s transformation in recent years from a sleepy backwater port to a booming financial and shipping hub has come thanks to large infrastructure projects undertaken by state-owned companies such as Emaar and Dubai World. Dubai’s growth is now under threat because the emirate has had to rely almost entirely on outside financing to fund these projects, and project finance and foreign credit lines have shrunk because of the global credit crunch and falling oil prices.
Citigroup, which enjoys a longstanding banking relationship with the emirate, voiced its confidence at a time when Dubai has attempted to reassure investors and its creditors that it is capable of servicing the $80 billion of debt that the city-state and its companies have outstanding. More urgently, Dubai has $12 billion of nonbank debt coming due in 2009, according to Fitch Ratings.
Analysts and bankers in Dubai question where that cash is going to come from next year, especially since two pillars of Dubai’s economy — real estate and banking — are feeling the pinch. The statement from Citibank did little to address those concerns…SOURCE
Add to the artcle’s concern over banking and real estate a very real slow down in tourism and transport and the perfect economic storm beginning to hit the UAE is just starting to emerge. Of course, you have to wonder what is going on a Citi Bank too when just in November they sold 6 billion in Dubai debt at a loss.
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Tags: Artcle, Bank Loans, Citi Bank, Citibank, Citigroup, Citigroup Inc, Debt Obligations, Economic Storm, Economic Trouble, Emaar, Feeling The Pinch, Fitch Ratings, Global Credit Crunch, Infrastructure Projects, Oil Prices, Persian Gulf, Positive Outlook, Project Finance, Shipping Hub, United Arab Emirates, World Dubai, Wsj
