Dubai investment firm vows to repay $4B in debt
DUBAI, United Arab Emirates (AP) — A Dubai government-run conglomerate that controls some of the emirate's industrial powerhouses will repay in full $4 billion worth of debt coming due later this month, the city-state vowed Monday in a move that could reassure investors amid fresh concerns about the strength of the world economy.
Investment Corporation of Dubai, whose holdings include the Middle East's biggest airline, Emirates, is widely seen as the healthiest of Dubai's three major government-linked conglomerates.
Monday's announcement by Dubai's official media office comes as world markets are slumping following Standard & Poor's one-notch downgrade on Friday of the United State's credit rating.
The emirate is still recovering from global financial crisis two years earlier, as well as the near-default of one of its key government-related business conglomerates, Dubai World. Severe debt problems at that conglomerate sparked credit fears that sent world markets reeling in late 2009.
In a statement, ICD's chief said his company has the resources and is committed to paying its debts.
"This substantial repayment is the result of our strong portfolio of diverse and successful companies across Dubai, as well as the underlying strength of our economy," said Mohammed al-Shaibani, the ICD executive director and CEO. "Dubai is witnessing a recovery and remains a stable financial center ... and has proven its resilience in recent times."
Besides Emirates and the airline's related businesses, ICD controls aluminum smelter Dubal, the Emirates National Oil Co., the Dubai World Trade Center real estate complex and stakes in local banks.
It is also owns part of Emaar Properties, the developer of the world's tallest tower, and Borse Dubai, which runs the city-state's stock markets and holds a 20 percent stake in the London Stock Exchange.
The government said ICD would repay the $2.5 billion in conventional debt and $1.5 billion in Islamic loans it owes by the August 21 due date. It expects to cover the debts mainly using cash dividends generated from the company's operating units.
ICD has another $2 billion worth of debt from the same pile of loans that matures in 2013.