In a visit to the Gulf emirate, the Business Secretary urged its leaders, and the managers of stricken group Dubai World, to come up with details of how investors in its troubled units will be treated, or face further investment exodus. However, the company – effectively a state offshoot – has not yet provided any details on an offer, according to a spokesman, adding that it wanted to give creditors time to digest Dubai World's business plan. Lord Mandelson, in Dubai to discuss the multi-billion pound exposure of British banks to the state, said: "Time is running out. The current uncertainty and the lack of agreement cannot go on indefinitely. "Dubai has to be conscious of the fact that how it resolves its current problems will mean a great deal for the Dubai brand, its reputation and how it secures investment from overseas in the future." The warning came as the Dubai Financial Market suffered its biggest fall in three weeks following reports that Dubai World, which has suspended interest payments on $22bn (£14bn) of debt until May, will offer creditors only 60 cents in the dollar after seven years. The cost of insuring against a Dubai default rose on Friday to the highest level since November, as investors once again turned their attention to the state's problems. According to information provider Markit, the price of credit default swaps on Dubai government debt rose from 592 basis points to 630. It represents a relapse for the economy, which admitted in November that it was unable to honour all its debt commitments. Dubai's resource-rich neighbour Abu Dhabi has pledged support for the economy, but so far neither has provided clear details on how the debt crisis will impact bondholders. The Dubai Financial Support Fund has passed at least $6.5bn to Dubai World out of $20bn in rescue funds provided by the UAE and Abu Dhabi. The benchmark Dubai Financial Market General Index dropped by 3.5pc to 1,617.51 points, while Abu Dhabi's equivalent measure fell 0.6pc. Lord Mandelson said: "The current uncertainty on a lack of agreement cannot go on indefinitely, even for much longer. "Therefore, [Dubai] has to tread carefully, it has to tread openly, it mustn't tread for too long and it does need to reach an agreement with its creditors that everyone can say is demonstrably fair to those who have invested their money, undertaken jobs, done well for Dubai and require Dubai to act fairly to them."Time running out for Dubai to pull itself out of danger, says Lord Mandelson
Time is running out for Dubai to restructure its debt and pull itself out of economic danger, Lord Mandelson has warned.
Dubai World debt strategy sends stock tumbling
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February 15, 2010
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