TEXT OF INTERVIEW
Steve Chiotakis: It was another rough session today for stock markets around the Persian Gulf. Dubai was down 7 percent. Abu Dhabi’s benchmark lost 3.5 [percent]. Investors there remain concerned about Dubai’s debt problems, but there’s been some positive developments from the state-owned holding company at the center of the crisis. Dubai World is talking with its banks about restructuring $26 billion in debt. Marketplace European correspondent Stephen Beard is with us live from London with more on this. Hi, Stephen.
Stephen Beard: Hello, Steve.
Chiotakis: So with the latest news, does this mean things aren’t as bad as they seemed?
Beard: Well yes, on the face of it. Things look better than they did certainly last week. Dubai World is seeking to restructure less than half its declared debt — as you say, $26 billion, that’s rather than $60 billion. Markets have steadied a bit, and the cost of insuring against Dubai, the city state itself going bust, has fallen. So fears of government default have receded.
Chiotakis: But I suspect Dubai’s problems are far from over.
Beard: Haha, you suspect correctly. Certainly Dubai remains, and its companies, heavily mired in debt, it’s got some big bond and bank repayments looming in each of the next three years. And some experts believe that Dubai will inevitably have to sell off some of its prized assets, probably to its wealthy fellow Sheikdom, Abu Dhabi. George Joff of Cambridge University thinks Abu Dhabi could even end up taking over Dubai’s airline, Emirates:
George Joffe: The objective of this will be to combine it with the Gulf airline, Etihad, which is owned by Abu Dhabi, and which has always seen Emirates airlines as an unreasonable competition.
Now that of course is speculation, but one things seems certain, Steve: Dubai’s ambition to become a major regional financial center has suffered a massive, perhaps fatal, blow.
Chiotakis: All right, Marketplace’s European Correspondent, Stephen Beard, with us from London. Stephen, thanks.
Beard: OK, Steve.