In Sanskrit, there is a saying “Mounam Sarvaartha Sadhagam”,general meaning being Silence is conducive for achievement in Life;special meaning is Silence is conducive to worldly wealth.
In Dubai , the ruling class maintained a discreet silence when people invested in Dubai World, thinking it has Royal Patronage(they are right for in Sheikdoms nothing will move with out the Sheikh’s participation) and came out the govt. has nothing to do with Dubai World when the bubble burst.
RBS had earlier been bailed out secretly by the UK govt.How these banks are going to come out of this mess is an open question.
Ultimately, the small investors are going to be hit as usual.
Story:
The UK banks are understood to have much of their lending focused on the still-performing parts of Dubai World, however, including DP World and Jebel Ali Free Zone. According to people close to the situation, that reduces the exposure to the $26bn of Dubai World debt that is being restructured to about $700m for RBS, and $350m for StanChart, for example – far smaller tallies than many had feared. The banks all declined to comment.
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Other top 15 creditors include international banks such as BNP Paribas, Société Générale and Calyon.
The $26bn of debt that is being restructured comprises $5.5bn of syndicated debt and close to $6bn of sukuk bond debt, with all of the latter issued by Nakheel. The balance is made up of bilateral lending deals between Dubai World companies and individual lenders, on which no data is published.
The bookrunners for the $5.5bn syndicated issue, arranged in June 2008, were HSBC, ING, Lloyds, Mashreq Bank, RBS, Sumitomo Mitsui, Calyon and Tokyo Mistubishi, according to Bloomberg data. Typically, bookrunners retain 10-20 per cent of loans, syndicating the rest to third party lenders.
Anger has been mounting in recent days, particularly among bond investors, who complain that they were duped by assurances given this year from Dubai’s rulers as to the emirate’s creditworthiness.
After an announcement by Sheikh Mohammed bin Rashid al-Maktoum on September 8 that he was “not worried” about Dubai’s debt position, international investors piled into Nakheel bonds.
Analysts said at the time that the announcement was a significant fillip to confidence in Dubai and its state-backed enterprises. “This is the first time that we are hearing from the ruler on Dubai’s debt issue. This has boosted market confidence dramatically,” said Nish Popat, the head of fixed income at ING in Dubai in a note to clients on September 9.
Although local authorities insist they were referring to the state’s sovereign obligations, investors say the emirate had long cultivated the notion of a quasi-sovereign “Dubai Inc” family that was central to the state’s development and would be supported in the event of difficulties.
“Nakheel is one of the most leveraged companies I’ve seen in my entire career,” said one hedge fund manager. “People bought it because they’d assumed there was some kind of state guarantee, which there wasn’t.”
http://www.ft.com/cms/s/0/57c9c17a-df6f-11de-98ca-00144feab49a.html
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