Market jitters over Dubai debt
The Australian sharemarket is poised to follow other world markets today and trade cautiously as concerns continue to linger about the debt restructuring announcement by Dubai state-owned company Dubai World late last week.
The announcement, which continues to cause uncertainty in world markets, saw the Australian sharemarket record its biggest drop in five months last Friday, dropping 3 per cent.
The sell-off on world sharemarkets last week indicated the level of uncertainty surrounding Dubai World’s debt restructuring announcement and the consequences that its estimated US$59.3 billion of liabilities will have on further exacerbating the US$1.72 trillion of losses and write-downs already attributed to the global financial crisis.
Dubai World is controlled by the emirate’s ruler, Sheikh Mohammed Bin Rashid Al-Maktoum, and according to reports from Bloomberg in the US it has borrowed from more than 70 lenders worldwide. The Dubai government has already reported that it will seek a “standstill” agreement this week to delay repayment of its debt.
It is unknown yet whether Abu Dhabi Commercial, one of Dubai World’s largest creditors, will help bail out the struggling company, or whether the oil rich emirate of Abu Dhabi – one of the seven emirates of the United Arab Emirates – will be willing to underwrite its unpaid loans.
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