Abu Dhabi helps Dubai firm repay 4.1-billion-dollar bond

Dec 15, 2009, 11:54 GMT

Dubai - The government of Dubai said Monday it would use a 10 billion dollar facility made available to it by neighbouring emirate Abu Dhabi to pay immediate financial obligations, including a 4.1-billion-dollar bond that is due.

'The government of Abu Dhabi has agreed to fund 10 billion dollars to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World,' according to a statement from Shaikh Ahmad Bin Saeed Al Maktoum, chairman of the fund.

'As a first action for the new fund, the government of Dubai has authorized 4.1 billion dollars to be used to pay the sukuk obligations that are due today,' the statement added, referring to the major debt of Nakheel, the development wing of troubled Dubai World holding company, whose Islamic bond came due Monday.

Dubai World said on November 25 that it would not be able to meet debt obligations and would require a freeze on repayment. It has since clarified that it aimed to restructure some 26 billion dollars in liabilities.

The support fund was set up earlier this year to help ailing government-controlled companies affecting by the collapsing housing bubble and the global economic crisis. It was funded by the central bank of the emirates and Abu Dhabi, the oil-rich neighbour of Dubai.

The statement said the United Arab Emirates Central Bank 'is also prepared to provide support to local UAE banks.'