Dubai World lenders may accept extending the maturity of debt

from MoneyTrading.com.au

Dubai World's creditors have rejected the idea of taking a "haircut" on $22 billion of debt with preliminary discussions shifting towards extending the maturity of existing loans and bonds, bankers familiar with the matter said. Dubai World has agreed to keep paying interest on the debt and to reschedule maturities of the principal as local banks are not in a position to handle any losses on their exposure to Dubai World.

It was feared that Dubai would try and force creditors into taking a 40% "haircut" on their exposure to Dubai World but these initial discussions were universally rejected by lenders, the bankers said.

Uncertainty over the outcome of talks between creditors and Dubai World regarding $22 billion of debt, that's equal to almost half the U.A.E.'s estimated oil revenue last year, has weighed on the emirate since November when the need to restructure was first announced.

The last week has seen representatives of Dubai World hold informal meetings with creditors in London and Dubai as both sides edge towards a deal. A spokesperson on behalf of Creditors stated that the restructuring has entered the final phases and they agreed on the terms and now have to discuss it with the other banks. Major creditors are hopeful that the terms of formal deal will be made public next week.