Global Markets In Turmoil After Debt Bombshell

[badge]

Not a good time to be buying an EK ticket - asking 33% more YoY :|

[chiang mai]

Not a good time to be buying an EK ticket - asking 33% more YoY :|

Actually the other way around, one is a fire/desperation sale and the other is normal price.

[yabaaaa]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

No kidding?

Devastated place with 1/3 former number of inhabitants still in Dubai would have any interest to travel at all? Anyone want to travel there at all?

How many would watch if the airline be around in a year?

All those financial criminals have dispersed, real estate down 60%.

Real estate are trying to rent out not those palaces - but accommodation built for construction workers to live at during the boom.

And now, you still don't understand that 55 machines like A-380 will have far less, if any, payload to carry?

Funny you mention the A380 I flew in on this last week Business Class............... I was staggered to see it was full!! In fact in the last 3 years I have noticed all my flights from the Uk are full and from my regional airport in Birmingham there are still two flights a day. Puzzled as I really did expect to find at least Business class relatively empty. I must say Emirates A380 business class seats are great!! The bar area is good too.

[badge]

Not a good time to be buying an EK ticket - asking 33% more YoY :|

Actually the other way around, one is a fire/desperation sale and the other is normal price.

Actually having flown with them over this period last year, and many previous years, I cant recall another time where prices have been hiked as much YoY.

Sadly, try as I might, last year I didnt get any fire/desperation sale tickets either.

Infact, the only offers I saw last year from EK were for couples/partners(2 tickets)?

[Orion76]

Infact, the only offers I saw last year from EK were for couples/partners(2 tickets)?

They need to change that if they want to become the Pattaya of the Middle East

[Abrak]

Here's some facts and Quasi facts about Dubai and debt.

Personally I dont think it is worth getting too excited about the foreign debt because the currency peg at Dirham3.67:US$1 is essentially maintained by Abu Dhabi. If Dubai was an independent country its currency would have collapse and foreign borrowings/GDP rocketed.

Here are the UAE bank stats

Loans US$226bn

Foreign US$60bn

Other assets US$115bn

Total Assets US$405bn

Deposits US$200bn

Foreign liab US$66bn

CDs US$18bn

Other Fin US$56bn

Equity US$65bn

Strange looking balance sheet for a bank. To be honest I dont know what those other assets are - possibly Islamic compliant loans.

According to Barclays at end December 2008 total outstanding foreign debt for UAE was US$211bn of which Dubai accounted for US$115bn. 45% US$52bn was quasi sovereign like DP World, 39% US$45bn was from UAE banks, 15% US$17.25bn and 2.5% US$2.75bn sovereign.

If anything this figure could be too low because Dubai World, DP World and Nakheel are estimated at US$39.7bn.

According to Credit Suisse the UK, France , Germany, The US and Japan based on BIS numbers have US$90bn exposure to UAE.

The other point to consider is domestic debt. Dubai accounts for approximately 33% of UAE bank assets, so 33% of loans would be another US$66bn. Abu Dhabi accounts for 55% of bank assets of which 30% is exposure to Dubai another US$37bn of lending. So total Dubai borrowing maybe as high as US$218bn.

The problem with all these stats is that they are not split out so for instance GDP seems to be between US$50-80bn (wikipedia says it was US$37bn in 2005) and total debt to GDP maybe between 250% to 400% of GDP. It also equates to US$900,000 of debt for every UAE National.

Non performing loans are around 3% (although only declared NPLs after 180 days non-payment), capital adequacy 15% etc. However, I suspect that Abu Dhabi was beginning to worry about its banking sector which along with Dubai's is dependent on non-deposit financing. Luckily there sovereign wealth fund is worth US$400bn-US$800bn which makes this all look like peanuts.

And in the greater scheme of things if 30% of debt has to be written off and debt really is that high, it isnt of any great significance. And they did have one hel_l of a party.

[neil324]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

No kidding?

Devastated place with 1/3 former number of inhabitants still in Dubai would have any interest to travel at all? Anyone want to travel there at all?

How many would watch if the airline be around in a year?

All those financial criminals have dispersed, real estate down 60%.

Real estate are trying to rent out not those palaces - but accommodation built for construction workers to live at during the boom.

And now, you still don't understand that 55 machines like A-380 will have far less, if any, payload to carry?

Funny you mention the A380 I flew in on this last week Business Class............... I was staggered to see it was full!! In fact in the last 3 years I have noticed all my flights from the Uk are full and from my regional airport in Birmingham there are still two flights a day. Puzzled as I really did expect to find at least Business class relatively empty. I must say Emirates A380 business class seats are great!! The bar area is good too.

Can't comment about biz class, only cattle class. Emirates have had very competitive pricing all year even beating the cheaper options going out of London.

[Terminator]

Well 3-years ago, York Club Thursday night ratio was 10 guys to 1 girl and the place was packed, 2 weeks ago it was 1 guy to 5 girls or thereabouts and the place was half full. I hope that this answers your question, and yes the numbers are a lot less!

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

Have all the Russians and Chinese left or are their numbers down?

[LaoPo]

Well 3-years ago, York Club Thursday night ratio was 10 guys to 1 girl and the place was packed, 2 weeks ago it was 1 guy to 5 girls or thereabouts and the place was half full. I hope that this answers your question, and yes the numbers are a lot less!

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

Have all the Russians and Chinese left or are their numbers down?

So: it's not just Arabs, suffering, now the girls too ?

What a world

LaoPo

[Naam]

Well 3-years ago, York Club Thursday night ratio was 10 guys to 1 girl and the place was packed, 2 weeks ago it was 1 guy to 5 girls or thereabouts and the place was half full. I hope that this answers your question, and yes the numbers are a lot less!

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

Have all the Russians and Chinese left or are their numbers down?

hmmm... the York Club as measure of GDP. interesting!

[flying]

Worries that Dubai washing its hands of debt woes

[think_too_mut]

And lets face it it is one of their easiest assets to flog off to Abu Dhabi and I have no idea what cancellation fees are like.

it is an open secret that Abu Dhabi is very much interested in at least a share of Emirates. but apart from that the airline is profitable (and so is Etihad) and getting out of any A380 contract is rather easy. EADS is and will be late with all deliveries and therefore in breach of contract.

No shit Sherlock?

How easy was it for Thai Airways to get out of their contract? To cancel A-380 TG still had to pay 700 mil US$ on 1.8bil worth of aircraft.

They are stuck with 6 unneeded planes. What are Emirates going to do with 55 of them? Who would ever have any need to fly to that desert shithole?

Don't claim you did not know, it was Here among many other places.

[PattayaParent]

Well 3-years ago, York Club Thursday night ratio was 10 guys to 1 girl and the place was packed, 2 weeks ago it was 1 guy to 5 girls or thereabouts and the place was half full. I hope that this answers your question, and yes the numbers are a lot less!

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

Have all the Russians and Chinese left or are their numbers down?

hmmm... the York Club as measure of GDP. interesting!

Just so's the folks in Pattaya have something to relate this economic discussion to!

[Abrak]

This should run for a little while for a few reasons

1) Dubai's 'quasi' sovereign debt. The quote was a Barclays report but when broker's call something 'quasi' you should be a bit worried. In the Nikheel prospectus it warns something like Dubai doesnt issue sovereign debt or sovereign guarantees. So its a bit odd when you see all those Dubai sovereign credit defaults rocket. When Dubai says it 'doesnt' possibly it means it 'cant' as it doesnt even have a credit rating. Now I am sure a lot of debt players know, Naam obviously did as he pointed out the cost of an Emirates debt was not Dubai debt just because it is owned by the Dubai Government.

But there has been an awful lot of selling on the back of this quasi sovereign debt stuff. Nikheel's Sukuk was guarantee by Dubai world (subordinated to all its debts) the Dubai Government owns that. As far as I can see (although I do know next to nothing about debt) it is possible to buy Dubai sovereign defaults when there is no sovereign debt.

2) These Sukuk's that are issued (although small) may also cause a problem. Arab's dont like to charge interest so they form an SPV throw in a whole of assets and use the income generated from those assets to a pay an interest rate. Supposedly on default they have 'some' claim on the assets. But as far as I can see these assets are not collateral and can be used by the company to generate additional debt. Nikheel's Sukuk says they rank along side its other uncollateralized debt. So they appear a mix between a crappy bond and crappy equity. Now again I am not sure the Sukuk's buyers thought it was sold that way and they do seem to have 'some recourse' both through UK and Dubai courts (although Dubai reserves the right to ignore the UK courts.) The problem is that the Middle East sees them as a good thing, so Abu Dhabi might not want them to default and ruin their fledgling market while if they guarantee the Sukuk's in some form other debt holders are going to get upset. I mean Abu Dhabi has a 5 year restructuring job to do and it doesnt want to spend its time fighting this all out in court. Nikheel's Sukuk was trading at 58 yesterday with redemption due in two weeks above par. The assets in the SPV were originally valued double the loan. I thought they might pay it to save the 'concept' and avoid legal problems.

It is obvious that Abu Dhabi brought this to a head presumably because Dubai wasnt listening. Still if Abu Dhabi ends up bailing out all their banks it might simply takeover the financial system rather than give them a sweetheart deal. Afterall what is the point of being a bank if you dont have a Government to bail you out of your losses.

[JimsKnight]

An American pastor called Linsey Williams who used to work in the oil fields of Alaska was on a talk radio show in July of last year. On it he said that the real people who control the price of oil will bring it down to $50 a barrel by the end of the year and keep it that way for months. This is when the price of oil was $140 a barrel and everyone was predicting it would hit $200 a barrel. He said the intention was to keep it at $50 till they bankrupted Dubai and to remind OPEC just who was running the show. He was laughed at by nearly everyone. He turned out to be correct in nearly everything he predicted. His " Non oil crisis " documentary also makes good viewing. I fully believe this whole crisis was managed to great effect and saw the biggest transfer of wealth in history.

If oil dips that low a lot of us oil and gas workers will be seriously pissed off and out of work.

If there's no equilibrium (ie a steady price) things are just like extreme-feats and famine.

My £2 is that oil will hold steady for a while longer...

[neil324]

Looks like its not problem and game on today.

[Naam]

And lets face it it is one of their easiest assets to flog off to Abu Dhabi and I have no idea what cancellation fees are like.

it is an open secret that Abu Dhabi is very much interested in at least a share of Emirates. but apart from that the airline is profitable (and so is Etihad) and getting out of any A380 contract is rather easy. EADS is and will be late with all deliveries and therefore in breach of contract.

No shit Sherlock?

How easy was it for Thai Airways to get out of their contract? To cancel A-380 TG still had to pay 700 mil US$ on 1.8bil worth of aircraft.

They are stuck with 6 unneeded planes. What are Emirates going to do with 55 of them? Who would ever have any need to fly to that desert shithole?

Don't claim you did not know, it was Here among many other places.

so you have seen the contract between EADS and Emirates and evaluated all individual clauses Watson? or are you as usual just thinking, respectively assuming too mut?

[AlexLah]

Have you?

[neil324]

Have you?

Sounds like it

[LaoPo]

Dubai ruler: "we are strong and persistent"

Moody's: "...Dubai government and its related entities carried $100 billion of debt, above the market estimate of around $80 billion."

Dubai ruler plays up strength as Gulf markets fall

Tue Dec 1, 2009 8:27am EST

By Jason Benham

DUBAI (Reuters) - Gulf markets dropped again on Tuesday, taking little comfort from Dubai World's plan to restructure about $26 billion of debt, while the rulers of Abu Dhabi and Dubai talked up their economic strength.

Dubai stocks fell a further 3.6 percent and the Abu Dhabi bourse lost 5.6 percent on their second trading day since Dubai last week asked creditors of Dubai World and its property arm Nakheel for a six-month delay on debt repayments. Qatar's bourse was also more than 8 percent lower.

State-controlled Dubai World, which led the emirate's transformation into a regional hub for finance, investment and tourism, unveiled details late on Monday of its plan covering $26 billion of debt owed by its main property firms, Nakheel and Limitless.

Global markets took a pounding when the Dubai news broke last week, though on Tuesday Asian and European stocks were up, following the lead from Wall Street overnight.

Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, who is also the United Arab Emirates' vice president, prime minister and defense minister, said the global reaction had shown "a lack of understanding."

"We are strong and persistent," he told reporters.

Sheikh Khalifa bin Zayed al-Nahayan, president of the UAE and ruler of Abu Dhabi, said the UAE economy was showing signs of growth in the fourth quarter.

Dubai's troubles could shift political power in the UAE, a seven-emirate federation celebrating 38 years of independence on Wednesday, toward oil-producing Abu Dhabi and away from its exuberant neighbor.

The Dubai World group, whose total liabilities are estimated at nearly $60 billion, said the restructuring would exclude "financially stable" units such as Infinity World Holding, Istithmar World and Ports & Free Zone World, which includes DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone.

Dubai World would look at options for cutting its debt, including asset sales, it added.

In London, ratings agency Moody's said it estimated the Dubai government and its related entities carried $100 billion of debt, above the market estimate of around $80 billion.

Moody's also said ports operator DP World and Jebel Ali Free Zone had approximately $10 billion in debt.

HIGH-YIELD MARKET

"Dubai's corporate landscape is now effectively a high-yield market," said Philip Lotter, senior vice president of EMEA corporate finance group at the ratings agency.

Mardig Haladjian, general manager of Moody's EMEA banking group, said possible multiple defaults related to Dubai World's restructuring could hit the credit ratings of UAE banks, but not those of international banks exposed to the group.

In a sign that concern among local banks was subsiding, however, UAE interbank offered rates eased, with the 3-month rate falling to 1.90500 percent from Monday's 1.94125 percent fix.

And the cost of insuring Dubai debt against restructuring or default fell, with its five-year credit default swaps dropping to 526 basis points from Monday's close of 570, according to CMA Datavision. It stood around 300 basis points before last week.

Jebel Ali Free Zone, a unit of Dubai World which is not part of the restructuring, said it had made a coupon payment on Monday on its 7.5 billion dirham ($2 billion) Islamic bond.

Dubai World's restructuring plan appeared to calm global fears of contagion and reassured some investors in the region.

"This is definitely good news, it shows they are still committed to their payments, and it removes all fears that this is a complete default," said Hassaim Arabi, chief executive at Gulfmena Alternative Investments.

A Dubai-based strategist said the plan was a positive step because it disclosed the scale of the problem. "But the main concern remains unchanged. What is the outcome of those negotiations with regard to the Nakheel problem?" he asked.

The Abu Dhabi market had plunged 8.3 percent on Monday, its worst one-day drop on record, while Dubai's fell 7.3 percent, its biggest in more than a year.

Reuters: http://www.reuters.com/article/topNews/idU...0091201?sp=true

LaoPo

[AlexLah]

Who will benefit or loose from a default of the corporation or part of (just thinking of insurance contracts).

[ilyushin]

Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

This is a lot more difficult than it sounds. Large oil reserves and production lead to current account surpluses and your currency appreciating. I think it is called 'Dutch disease' not that I ever remember the Dutch having any oil. Essentially what happens is that you find oil start producing and exporting, large surplus, currency appreciates and destroys the competitiveness of your manufacturing base which then dies.

Abu Dhabi is quite smart here because it takes all its forex and ploughs it into long term investments usually overseas

I think Thailand with their US$150bn of reserves should refinance and takeover the place. Anyway I am sure they would really appreciate the offer.

1. I would like to know the source of the article by Rami G. Khouri* in Ilyushin's post?

Khouri (I looked him up) is not a dumb journalist but his question is rather dumb when he speaks about "...our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable growth that is based upon producing goods and services......"

Since when are the Arab countries known for their skills of producing goods and services not to speak if they could ever compete with the real producing countries ?

And, what does he mean if he speaks about "free the minds and spirits of our youth" ?

Does he mean the (Arab) youth is Westernized ? Anybody ?

2. Thailand might have reserves but they could never take over Dubai nor do they have enough qualified people to run the place; as if the Arabs would allow Asian expats to run the place...

* http://www.agenceglobal.com/author.asp?type=2&id=7

Rami George Khouri is a Palestinian-Jordanian and US citizen whose family resides in Beirut, Amman, and Nazareth.

He is the Director of the Issam Fares Institute of Public Policy and International Affairs at the American University of Beirut as well as editor-at-large of the Beirut-based Daily Star newspaper. He is an internationally syndicated political columnist and author.

Rami was a visiting scholar at Stanford University in October 2006, and in November 2006, he was the co-recipient of the Pax Christi International Peace Award for his efforts to bring peace and reconciliation to the Middle East.

LaoPo

Source

[Naam]

Global Markets In Turmoil After Debt Bombshell

sandstorm in a teacup

[LaoPo]

Global Markets In Turmoil After Debt Bombshell

sandstorm in a teacup

A teacup-dream crashed in thousands pieces, created by a ridiculous megalomaniac Sheikh Mohammed, the ruler of Dubai.

The sandstorm is likely to end up in debts, surpassing the $ 100 Billion mark; that's quite a sandstorm in a teacup Naam

LaoPo

[Naam]

Global Markets In Turmoil After Debt Bombshell

sandstorm in a teacup

A teacup-dream crashed in thousands pieces, created by a ridiculous megalomaniac Sheikh Mohammed, the ruler of Dubai.

The sandstorm is likely to end up in debts, surpassing the $ 100 Billion mark; that's quite a sandstorm in a teacup Naam

LaoPo

which country has no debt? the teacup is not in pieces. in a few years only a few will remember the "Dubai crisis". what we experience is the proverbial "the mountain went into labour and gave birth to a mouse".

[losworld]

<br />An American pastor called Linsey Williams who used to work in the oil fields of Alaska was on a talk radio show in July of last year. On it he said that the real people who control the price of oil will bring it down to $50 a barrel by the end of the year and keep it that way for months. This is when the price of oil was $140 a barrel and everyone was predicting it would hit $200 a barrel. He said the intention was to keep it at $50 till they bankrupted Dubai and to remind OPEC just who was running the show. He was laughed at by nearly everyone. He turned out to be correct in nearly everything he predicted. His " Non oil crisis " documentary also makes good viewing. I fully believe this whole crisis was managed to great effect and saw the biggest transfer of wealth in history.<br />

&lt;br /&gt;&lt;br /&gt;&lt;br /f<br /><br />

This guy's story is rather interesting as he claims the massive oil find in Alaska was shelved by higher ups who did not want a low oil price nor American self sufficiency in oil. He was doing speaking tours but has been low key lately as he claims he has received death threats. There may very well be some truth to his stories. There has been a strong push by organized media over the last years to dismiss all counterclaims as conspiracy theory or nutjobs. When the public begins to investigate outside the main media they will find how things really work. The media here is controlled just like Pravda was controlled. The only real difference is they are smart enough to run the occasional counter stories but of course outweighed by the agenda. One need only look at all the economic greenshoot stories which go against all reality to see how the agenda is being pushed.

Also closer scrutiny will reveal the dotcom bust was more about taking control from liberal upstarts (remember aol and time warner?) than a market correction based on value. One need only look at the current stock market to see overvaluations as ridiculous as the dotcom bubble but you don't hear anyone hollering about fair market value now do you?

Edited December 3, 2009 by losworld

[LaoPo]

Global Markets In Turmoil After Debt Bombshell

sandstorm in a teacup

A teacup-dream crashed in thousands pieces, created by a ridiculous megalomaniac Sheikh Mohammed, the ruler of Dubai.

The sandstorm is likely to end up in debts, surpassing the $ 100 Billion mark; that's quite a sandstorm in a teacup Naam

LaoPo

which country has no debt? the teacup is not in pieces. in a few years only a few will remember the "Dubai crisis". what we experience is the proverbial "the mountain went into labour and gave birth to a mouse".

Dubai has less than 2,5 million original Emirati (UAE less than 5 million) and I don't think there are many "countries" with such debts. But, of course big cousin Abu Dhabi has enough dosh to pay for the spilling Sheikh.

The exclusivity is gone though.

LaoPo

[LaoPo]

D U B A I

SOME NEWS IS SO BIG IT NEEDS ITS OWN PAGE

By The Huffington Post:

http://www.huffingtonpost.com/news/dubai

LaoPo

[Naam]

Dubai has less than 2,5 million original Emirati (UAE less than 5 million) and I don't think there are many "countries" with such debts. But, of course big cousin Abu Dhabi has enough dosh to pay for the spilling Sheikh.

The exclusivity is gone though.

LaoPo

actually the total population of Dubai is less than 1.5 million out of which less than 350.000 are Emiratis, i.e. possess UAE citizenship. the overall majority are foreigners, a lot of them with a timewise limited residence status.

Edited December 4, 2009 by Naam

[LaoPo]

Dubai has less than 2,5 million original Emirati (UAE less than 5 million) and I don't think there are many "countries" with such debts. But, of course big cousin Abu Dhabi has enough dosh to pay for the spilling Sheikh.

The exclusivity is gone though.

LaoPo

actually the total population of Dubai is less than 1.5 million out of which less than 350.000 are Emiratis, i.e. possess UAE citizenship. the overall majority are foreigners, a lot of them with a timewise limited residence status.

...so, is there any other state/emirate/country/city with less than 350,000 original inhabitants having a total debt as large as Dubai, between $ 60 -100 Billion....?

The Sheikh did quite a job and I wonder what a good shrink would say about him...

LaoPo