United Arab Emirates

The United Arab Emirates central bank on Sunday said that it stood behind domestic and foreign banks operating in Dubai after last week’s announcement that Dubai World needed more time to pay back some of its $60 billion in debt, The New York Times reported. Dubai surprised the financial world on Wednesday when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, to agree to a six-month standstill on the debt. Global markets sank on the news.

A Saad Group subsidiary says it is unable to make payments on a US$650 million (Dh2.38 billion) Islamic bond maturing in 2012, The National reported. Saad Trading, Contracting and Financial Services, part of the struggling family-owned conglomerate based in Saudi Arabia, said yesterday it was “impossible for the issuer to perform its payment obligations under the sukuk”. It made the disclosure in a statement to the Bahrain Stock Exchange, where the Golden Belt 1 sukuk is listed.

Several Dubai-based contractors say they are owed millions of dirhams by state-linked developers and some may face bankruptcy as credit dries up and major projects are cancelled or scaled back in the former Gulf Arab boom town, Reuters reported. "There has been a marked increase in the number of contractors asking for help to obtain payment, including payments certified months ago on some of Dubai's largest projects," Michael Grose, a partner at legal firm Clyde & Co LLP, in the Middle East Projects and Construction Group, told Reuters.

According to Abu Dhabi Commercial Bank CEO Eirvin Knox, Abu Dhabi won't allow Dubai's state-owned companies to default on debt payments as the global banking crisis limits their access to funds, Bloomberg reported yesterday. Dubai may need help from Abu Dhabi and the United Arab Emirates government to finance a surge in borrowing that paid for the world's tallest tower, palm tree-shaped man-made islands and stakes in banks worldwide, Moody's Investors Service said in a report last month.