Headlines

Dubai's debt problems clouded national day celebrations in the United Arab Emirates on Wednesday -- at least for a shaken financial community trying to work out whether any of their loans enjoy government protection, Reuters reported. Flags, fairy lights and fanfare marked the UAE's 38th anniversary at a moment when Dubai's request for a payment delay on $26 billion of debt owed by government-owned Dubai World has exposed the frailties of "quasi-sovereign" lending.

Greece does not face any bankruptcy risks, though the situation in the economy is worrying, Eurozone Finance Ministers said on Tuesday. They also noted that the Dubai debt crisis is unlikely to have a major impact on Eurozone banking system, RTT News reported. In a meeting held on Tuesday in Brussels, Eurozone finance ministers asked the Greek government to cut fiscal spending from its 2010 national budget to reduce the budget deficit. For 2009, Greece set a budget deficit target of 12.7% of GDP after October 4 elections. That was much higher than the 3.7% of GDP estimated earlier.

Dubai World broke six days of market-roiling silence early Tuesday morning, saying it was negotiating to restructure $26 billion in debt and anticipated a deal quickly, The Wall Street Journal reported. The announcement, just after midnight local time, came after Dubai government officials said the emirate wasn't obligated to step in and support the state-owned conglomerate. Stock markets across the United Arab Emirates tumbled in the first trading day since the government announced last week that it would ask for a six-month standstill on debt payments for Dubai World.

The debt crisis in Dubai is about to test one of the fastest-growing areas in banking, Islamic finance, and put the city-state’s opaque judicial system on trial, according to bankers and experts in finance, The New York Times reported. Many loans and bonds that comply with Shariah, or Islamic law, were issued in recent years by Dubai World, the investment arm of Dubai, and other Persian Gulf companies as oil-rich Middle East nations increased spending, and the global credit crisis fed debt investments in emerging markets.

The International Monetary Fund is closely watching how the Dubai Government will restructure Dubai World and deal with debt coming due, an official said, The National reported. The statement by the multilateral bank, which also welcomed the Central Bank’s decision to open an emergency lending facility for banks, is the latest response by global institutions to the surprise decision of Dubai World to seek a “standstill” on billions of dollars in debt repayments.

Liquidators pouring over the collapse of failed advisory firm Storm Financial are expected to finalise a report for the corporate regulator this week, The Sydney Morning Herald reported. Storm Financial - which was wound up in March owing about $80 million - advised thousands of clients to borrow money against their homes and take out margin loans to invest in indexed funds. The Townsville-based firm's clients suffered heavy losses when the sharemarket plummeted late last year, with some falling into negative equity whereby they owed more than they owned.

A turnaround plan for troubled fashion house Christian Lacroix drafted by its owners looks set to be adopted on Tuesday by a French court as potential buy-out candidates have failed to meet the terms for a takeover. "We did not receive the guarantees we asked for. There is nothing new (since the ruling was postponed)," the administrator in charge of the dossier, Regis Valliot, told Reuters on Monday. "The judgement should take place tomorrow." The decision could be pushed back until Dec.

Printers with unsecured debts from Derwent Howard Media will have the opportunity to meet with administrators tomorrow at a creditors meeting in Sydney, ProPrint reported. Derwent Howard has left behind a string of unsecured debts with various printing companies after being placed into voluntary administration late last month. Last week, Webstar confirmed it was owed around $678,000 while The Quality Group said its debt was "higher than" $245,000.

Chinese banks must beware of the risk of credit card defaults because overdue payments are rising sharply, the People's Bank of China said on Monday. Credit card payments that were more than six months late jumped 126.5 percent in the first three quarters from the same period last year, to 7.4 billion yuan ($1.08 billion), the central bank said on its website, www.pbc.gov.cn. 'The risk of bad debts on credit cards deserves constant attention,' the central bank said.

Mark Hotchin and Eric Watson's Hanover Group is headed for receivership if Allied Farmers' proposed debt for equity swap cannot be completed, the Grant Samuel report on the transaction found, The New Zealand Herald reported. However both Grant Samuel and Guinness Peat Group's Tony Gibbs, who yesterday confirmed his company had decided against tabling an alternative offer, raised questions about the deal's merit for Allied Farmers and its shareholders.