Abu Dhabi gives Dubai USD 10 bn bailout
Dubai: Abu Dhabi stepped in to help fellow United Arab Emirates member Dubai with a USD 10 billion injection, of which USD 4.1 billion was allocated to troubled state-owned conglomerate Dubai World to pay immediate obligations, Dubai said on Monday.
The move was the least expected of all options Dubai had on the table after requesting a standstill on USD 26 billion in Dubai World debt on November 25, alarming markets and shaking the image of the emirate as a regional business hub.
"The government of Abu Dhabi has agreed to fund USD 10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World," the chairman of the Dubai Supreme Fiscal Committee said in a statement.
"As a first action for the new fund, the government of Dubai has authorized USD 4.1 billion to be used to pay the sukuk obligations that are due today."
The yen fell sharply against other currencies on the news, while the dollar shot up to 88.90 yen and the euro also jumped to 130.43 yen.
S&P futures jumped to be up 0.7 percent, reversing early losses and pushing Treasury futures to session lows. Hong Kong`s Hang Seng index shot up 300 points in the last minutes of morning trade to finish in positive territory, while other markets across Asia also pushed higher.
Abu Dhabi is the largest member of the United Arab Emirates federation and a big oil exporter.
"We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheikh Ahmed bin Saaed al-Maktoum said in the statement.
"Dubai is, and will continue to be, a strong and vibrant global financial center. Our best days are yet to come."
Excess funds would be used to cater to Dubai Worlds needs up until the end of April 2010, the statement said.
Dubai has announced a bankruptcy law that it said could be used in case Dubai World and creditors failed to reach an agreement on debt maturing in the future.
"Dubai will announce a comprehensive reorganization law, a framework that is based upon internationally accepted standards for transparency and creditor protection," Sheikh Ahmed said.
"This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations."
Download the all new Zee News app for Android and iOS to stay up to date with latest headlines and news stories in Politics, Entertainment, Sports, Technology, Business and much more from India and around the world.
More from India
More from World
More from Sports
More from Entertaiment
- Muslim leader Asaduddin Owaisi says Aamir Khan wrong in wanting to leave India
- BJP's big poser to Aamir Khan: Is there any better neighbour for Muslims than a Hindu?
- Failed to secure confirmed reservation in train? Now you can travel in pantry car!
- Europe to 'free up space' by kicking out tens of thousands of Pakistanis
- Vladimir Putin rages as Turkey shoots down Russian plane