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Non Gulf Bond Holders Threaten to ‘Go Nuclear’ Over Repayment of Bonds

…Meanwhile, bondholders of the Nakheel sukuk that is due to be redeemed on Monday took part in a conference call organised by Deutsche Bank yesterday. Deutsche Bank, which is trustee to the sukuk, said it was seeking clarity from the issuer about its plans to restructure debt, according to two investors who participated in the conference call. Bloomberg reported that the call finished without any discussion of adopting specific recommendations, said the investors, who declined to be identified because the discussion was private.

One New York hedge fund manager said: “It was a ‘listen-only’ call that repeated all the public statements by the Dubai Government. There was absolutely no news or new information. It was a total waste of time.”

A letter from Ashurst, the London law firm hired by the non-Gulf bondholders, has been sent to Nakheel rejecting the call for a standstill on the sukuk repayment and seeking repayment in full on the due date.

A bondholder said: “We will make it clear that we are not afraid to push the nuclear button.”

“We will make it as difficult as possible for Dubai to borrow money at good rates again and try to embarrass them that way. We are enforcing our rights and expecting payment.”…MORE

Dubai is now Too Big to Fail

Dubai will survive the global credit crunch and the UAE Central Bank may subscribe further bonds other than the $10 billion bonds in February to meet the commitments and spending programmes, according to a top professor here.

Dean of Dubai School of Government Dr Tarik Yousef, in an interview with Khaleej Times, said Dubai is not just a city or an emirate. It has gained regional and global importance. Many people, sectors institutions, companies, entities, leaders want to achieve what Dubai has achieved because it is in everyone’s interest. Therefore, Dubai will remain socially, economically and politically a major hub for the world

“Dubai cannot be allowed to fail, and there is a strong commitment to ensure that Dubai is protected and remains attractive. Steps have been taken in Dubai to contain the crisis and set an amazing balance between the impact of the crisis and protecting whatever has been achieved,” Dr. Tarik said.

“Dubai is restructuring its public finance and has so far taken essential steps to reverse the current negative situation. The UAE government as well has shown a sense of seriousness and commitment to the growth and revival. The government has tried to balance everything and done what is right and pragmatic. There has been very little panic and more sense of coordination and thoughtful action.”

He added, “I am sure Dubai and the UAE together are dealing with the plunge effectively. We must remember that their futures are tied and one cannot exist without the other. All the emirates need to come together to face the challenges that we are facing,” he said.

Observing that 2009 is going to be a difficult year for Dubai as for the rest of the world, Dr. Tarik said 2010 may also be a difficult year too.

However, “We are thankfully in a part of the world which doesn’t have to go the IMF for a bailout or for cash,” he said…SOURCE