Dubai World's US$24.8 billion (Dh91.09bn) debt restructuring was never expected to be short, sweet and easy. Six months into a complex reorganisation that will surely be remembered as a seminal event in the UAE's modern financial history, however, analysts say a resolution is nearing. It is one they hope will lift markets and bring confidence back to crisis-weary contractors and property investors.
"People are comfortable that a resolution will be achieved soon," said Majed Azzam, a property analyst at Al-Futtaim HC Securities in Dubai. "Most of the lack of clarity has been alleviated, and now the uncertainty is more towards the lenders, because these guys are still not sure what they're going to get." Bringing the Dubai World negotiations to a successful close has long been a priority for the Dubai Government. Dubai World is one of the emirate's three main holding companies, and its well-publicised struggles have not made the job of reinvigorating the local economy any easier.
Dubai World began the restructuring exercise in November but took its first big step towards a deal in March, when it floated a proposal that offered new terms to banks, trade creditors and investors. The company needed a revised repayment schedule on debt after revenue dried up at its property subsidiaries and refinancing large loans became impossible because of the financial crisis. Some of its subsidiaries, however, including the private equity arm Istithmar and the ports operator DP World, were excluded from the exercise because they were in good financial health.
Under the plan put forward in March, contractors and suppliers serving Nakheel, the Dubai World-owned property developer behind the emirate's Palm islands, would each receive up to Dh500,000 in cash to settle unpaid bills. Companies owed more would be paid 40 per cent in cash and 60 per cent in a five-year Islamic bond with a 10 per cent profit rate. The Islamic bond, or sukuk, would be secured against the company's land holdings.
Investors in a separate pair of Nakheel sukuk, one of which was paid on time last week, were to be fully repaid under the proposal, which called for $9.5bn of cash injections into Dubai World. Some of the money would come from the Dubai Financial Support Fund, a body set up last year to distribute aid to state-owned companies. The remainder - about $3.8bn - would come from internal government resources.
The main snag now, according to Mr Azzam and other analysts, is tension between Dubai World and its creditor banks. Banks are owed some $14.2bn, which the company wants to reschedule into five and eight-year loans at 1 per cent interest, with an extra 1 per cent paid at the end of the eight-year term. Some banks view those terms as worse than those given to contractors, suppliers and sukuk investors. While many foreign lenders have cheered the proposal, Abu Dhabi Commercial Bank and Emirates NBD, the two local lenders on a seven-member panel representing 97 creditor banks, are understood to be especially resistant.
They are said to want interest tied to the prevailing market rates, instead of flat rates, in order to better align their borrowing costs with interest income from restructured loans. Local banks typically borrow in dirhams, and their cost of funding is reflected by the Emirates interbank offered rate (Eibor), which stands at about 2.3 per cent. They are said to claim that the margin between Eibor and Dubai World's 1 per cent offer could translate into losses of up to 25 per cent on loans they made to the conglomerate.
Despite resistance from local banks, which government sources say is unjustified given their low position in Dubai World's financial pecking order, there are signs that the restructuring is nearing its final stages, says Nish Popat, a banker in Dubai. Sultan al Suwaidi, the Governor of the Central Bank, last week told reporters the talks were going "very well". And Nakheel said on Thursday that trade creditors accounting for more than half of all claimants against the developer had agreed to the March proposal.
"The sukuk holders are being repaid, contractors are being given a 40 per cent payment and 60 per cent in bonds, and the only thing we have left are bankers discussing whether 1 per cent is adequate," Mr Popat says. "The market has now priced in that we're 95 per cent there, and it's a question of dotting i's and crossing t's." As a resolution draws nearer, the effects of the restructuring are still being felt. Bankers say many companies are waiting for calmer waters before attempting to raise money through bond issues and listings on stock exchanges. Given its size, the restructuring is also widely seen as a litmus test for Dubai's handling of an overall debt load that the IMF estimates at $109bn.
"I still know of a lot of [bond] issues where we don't have the confidence to go to the market," says Nabeel Ali, a senior vice president for institutional banking at Unicorn Investment Bank in Bahrain. "Neither the issuer or the adviser has the guts to go to the market yet." Few observers are willing to guess when Dubai World might seal its restructuring deal, but many say it is likely to come in a matter of weeks or months - certainly not years. For analysts, traders and bankers eagerly anticipating an economic recovery in the Gulf, a resolution could not come quickly enough.
Even if Dubai World inks a speedy and successful restructuring, though, there is no guarantee that such external factors as Greece's recent debt crisis will not continue to weigh on investor confidence in the region. Analysts are also carefully watching Dubai Holding, which recently hired accounting firms to evaluate the financial health of two subsidiaries. "We are truly a global village now," Mr Ali says. "If there's a rumour about Greece, the whole market gets affected even if we have nothing to do with Greece. In the Middle East, if something happens in Dubai, the whole market shivers."
afitch@thenational.ae
Gran Gala del Calcio 2019 winners
Best Player: Cristiano Ronaldo (Juventus)
Best Coach: Gian Piero Gasperini (Atalanta)
Best Referee: Gianluca Rocchi
Best Goal: Fabio Quagliarella (Sampdoria vs Napoli)
Best Team: Atalanta
Best XI: Samir Handanovic (Inter); Aleksandar Kolarov (Roma), Giorgio Chiellini (Juventus), Kalidou Koulibaly (Napoli), Joao Cancelo (Juventus*); Miralem Pjanic (Juventus), Josip Ilicic (Atalanta), Nicolo Barella (Cagliari*); Fabio Quagliarella (Sampdoria), Cristiano Ronaldo (Juventus), Duvan Zapata (Atalanta)
Serie B Best Young Player: Sandro Tonali (Brescia)
Best Women’s Goal: Thaisa (Milan vs Juventus)
Best Women’s Player: Manuela Giugliano (Milan)
Best Women’s XI: Laura Giuliani (Milan); Alia Guagni (Fiorentina), Sara Gama (Juventus), Cecilia Salvai (Juventus), Elisa Bartoli (Roma); Aurora Galli (Juventus), Manuela Giugliano (Roma), Valentina Cernoia (Juventus); Valentina Giacinti (Milan), Ilaria Mauro (Fiorentina), Barbara Bonansea (Juventus)
COMPANY%20PROFILE
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
MATCH INFO
Final: England v South Africa, Saturday, 1pm
The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
- Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
- Biodiversity: Support species like sea turtles, dugongs, and seabirds
- Coastal protection: Reduce erosion and improve water quality
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
UAE currency: the story behind the money in your pockets
Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
The%20specs
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%20Ramez%20Gab%20Min%20El%20Akher
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What is an ETF?
An exchange traded fund is a type of investment fund that can be traded quickly and easily, just like stocks and shares. They come with no upfront costs aside from your brokerage's dealing charges and annual fees, which are far lower than on traditional mutual investment funds. Charges are as low as 0.03 per cent on one of the very cheapest (and most popular), Vanguard S&P 500 ETF, with the maximum around 0.75 per cent.
There is no fund manager deciding which stocks and other assets to invest in, instead they passively track their chosen index, country, region or commodity, regardless of whether it goes up or down.
The first ETF was launched as recently as 1993, but the sector boasted $5.78 billion in assets under management at the end of September as inflows hit record highs, according to the latest figures from ETFGI, a leading independent research and consultancy firm.
There are thousands to choose from, with the five largest providers BlackRock’s iShares, Vanguard, State Street Global Advisers, Deutsche Bank X-trackers and Invesco PowerShares.
While the best-known track major indices such as MSCI World, the S&P 500 and FTSE 100, you can also invest in specific countries or regions, large, medium or small companies, government bonds, gold, crude oil, cocoa, water, carbon, cattle, corn futures, currency shifts or even a stock market crash.
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
UAE currency: the story behind the money in your pockets
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The specs
Engine: 2.0-litre 4-cyl
Power: 153hp at 6,000rpm
Torque: 200Nm at 4,000rpm
Transmission: 6-speed auto
Price: Dh99,000
On sale: now
LA LIGA FIXTURES
Saturday (UAE kick-off times)
Leganes v Getafe (12am)
Levante v Alaves (4pm)
Real Madrid v Sevilla (7pm)
Osasuna v Valladolid (9.30pm)
Sunday
Eibar v Atletico Madrid (12am)
Mallorca v Valencia (3pm)
Real Betis v Real Sociedad (5pm)
Villarreal v Espanyol (7pm)
Athletic Bilbao v Celta Vigo (9.30pm)
Monday
Barcelona v Granada (12am)
More from Neighbourhood Watch:
Founders: Ines Mena, Claudia Ribas, Simona Agolini, Nourhan Hassan and Therese Hundt
Date started: January 2017, app launched November 2017
Based: Dubai, UAE
Sector: Private/Retail/Leisure
Number of Employees: 18 employees, including full-time and flexible workers
Funding stage and size: Seed round completed Q4 2019 - $1m raised
Funders: Oman Technology Fund, 500 Startups, Vision Ventures, Seedstars, Mindshift Capital, Delta Partners Ventures, with support from the OQAL Angel Investor Network and UAE Business Angels
Company profile
Company: Eighty6
Date started: October 2021
Founders: Abdul Kader Saadi and Anwar Nusseibeh
Based: Dubai, UAE
Sector: Hospitality
Size: 25 employees
Funding stage: Pre-series A
Investment: $1 million
Investors: Seed funding, angel investors
