Dubai

“Feb. 17 (Bloomberg) — Dubai World will present a proposal to creditors in March to restructure about $22 billion of debt after its advisers complete valuing the assets of the state- owned company, a person close to the Dubai government said.”

About a month ago rumors spread out about Dubai World’s restructuring plan, which both credit and equity markets took badly. Dubai World may offer creditors either a 60% of principal payable in 7 years with a sovereign guarantee; or to get 100% of their principal paid back in seven years, but with no sovereign guarantee and possibly getting some of that principal in the form of Nakheel’s assets. The cost of insuring Dubai five-year debt has reached its 11 months high as debtors and investors were concerned over the fate of Dubai. The five-year CDS reached 651bps, more than the level it reached in November after the Dubai government announced a standstill on Dubai World’s debt.

The official offer will be given to creditors in the beginning of April. Dubai CDS fell to reach 488 bps last week, and the DFM index increased by about 5% since the beginning of the month.

Credit Swiss has gathered the sequence of events in the past couple of month and I’d like to share it with you guys:

Dubai
Dubai
Dubai
DubaiNovember 25, 2009: The Dubai government announces a US$5bn bond issue, sold equally to the National Bank of Abu Dhabi and Al Hilal Bank. The funds are intended to be used for the restructuring of government-related entities. A few hours later, Dubai World announces its intention to seek a standstill agreement with creditors to extend maturities until at least May 30 2010. In a separate statement, it was also announced that DP World would not form part of the restructuring package.
Dubai
Dubai
DubaiNovember 26: The Chairman of the Supreme Fiscal Committee releases a statement indicating that the intervention was carefully planned and that the government is spearheading the restructuring of its entities. It also states that more information is likely to be made available early the following week.

■ November 29: The UAE Central Bank steps in to provide a special liquidity facility at a nominal rate of 50bps above the 3-month EIBOR.

■ November 30: Dubai World announces that it would restructure up to US$26bn in debt. DP World is not taking part but Nakheel and Limitless (both real estate developers) are explicitly included. The Director General of Dubai’s department of Finance is quoted to have clarified that the Dubai government has not guaranteed any debt owed by Dubai World or any of its subsidiaries. Simultaneously, Nakheel requests the trading of its bonds be suspended.