Tag Archives: Money

Dear Uncle Abu Dhabi, can I borrow a *bit* more cash? Pls thx, Dubai.

Abu Dhabi has already injected 10 billion US dollars several months ago, and bought significant entities such as Emirates Airlines amongst others.

My guess is Dubai has been trying to get more assistance from Abu Dhabi unsuccessfully, and has made this move in a final attempt to get AD to cough up.

But will it cough up enough to manage the debt of between 80 and 150 billion US dollars (depending on who you ask that is Dubai’s total debt)?

Here are a few articles from CNN today on the breaking news.  Will be *interesting* to see what happens to the Dubai Stock Market when it reopens on Sunday.

Has debt freeze exposed Dubai mirage?

November 26, 2009 — Updated 1537 GMT (2337 HKT)

Dubai: Local moves, global implications

November 26, 2009 — Posted: 1352 GMT

Dubai shocks investors amid debt fears

By Simeon Kerr and Jennifer Hughes, FT.com
November 26, 2009 — Updated 1352 GMT (2152 HKT)

Investor confidence in Dubai, exemplified by its stunning architecture, has been shaken.

STORY HIGHLIGHTS

     

  • The size of Dubai World’s $22bn debt problem has been apparent for a year
  • Bond markets reacted sharply to the news, investors demanded higher premiums
  • BNP analyst: “Investors view this as shockingly bad news”
  • Moody’s cut ratings on some government-related entities to junk status

(Financial Times) — Dubai has shocked investors by asking for a debt standstill at Dubai World, the government’s flagship holding company that has developed some of the world’s most extravagant real estate projects.

The move raised the spectre of default in the Middle East’s trading hub just as early signs of economic recovery have emerged. During the boom, Dubai rode the wave of easy credit generating phenomenal economic growth but was badly hit by the global credit crisis.

Dubai’s surprise move angered some investors who had been reassured by local officials for months that the city would meet all obligations on its $80bn (£48bn) of gross debt in spite of recession and a real estate crash.

“Investors view this as shockingly bad news,” said Rob Whichello of BNP Paribas. Two hours after announcing it had raised $5bn from two Abu Dhabi banks, the department of finance asked for a standstill until May 30 on all financing to the heavily indebted Dubai World and its troubled property unit Nakheel, which is due to pay back $4bn on an Islamic bond on December 14.

This will destroy confidence in Dubai,
the whole process has been so opaque and unfair to investors.

–Eckart Woertz

Dubai also launched a restructuring of the government holding company, which oversees ports operator DP World, the UK-based P&O Ferries and troubled investment company Istithmar. Nakheel, the developer behind the city’s Palm Islands that boast celebrity owners such as David Beckham, has had to shed thousands of staff and left contractors out of pocket as local property prices halved and credit dried up.

A symbol of Dubai’s pre-crunch excess, the government company has had to cancel plans for the world’s tallest tower and a constellation of reclaimed islands, as collapsing cash flow left the developer on the brink.

The government’s announcement came after the local stock market had shut and on the eve of the Eid holidays, during which most offices will be shut until December 6.

“This will destroy confidence in Dubai, the whole process has been so opaque and unfair to investors,” said Eckart Woertz, economist with Dubai’s Gulf Research Centre.

A spokeswoman for the department of finance said the government intended to ask all bondholders to extend until May. But the government said no decision had yet been made on how to deal with investors insisting on repayment in December.

The gaping size of Dubai World’s $22bn debt problem has been apparent for a year. But the government’s level of support has been clouded by politics and a lack of clarity on how much it could raise from international markets and the oil-rich capital of the United Arab Emirates, Abu Dhabi.

Bond markets reacted sharply to the news with investors demanding higher premiums to hold debt from the region. In London trade it cost about $460,000 annually over five years to insure $10m worth of Dubai government debt against default, compared with $360,000 on Tuesday. Prices rose for its neighbours with Abu Dhabi protection $100,000 more than on Tuesday.

Standard & Poor’s and Moody’s Investors Service immediately downgraded the ratings of all six government-related issuers in Dubai following news of the repayment delay and left them on review for possible further downgrade.

Moody’s cut ratings on some government-related entities to junk status, while S&P cut ratings on some entities to one level above junk.

S&P said the restructuring “may be considered a default under our default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity.”

Advertisements

Counterfeit

A couple of days ago I was standing in the queue waiting to pay for my fourth pair of skinny jeans in 2 weeks (gone skinny mad!). Next to me was a guy with a WAD of greenbacks – hundreds.

He took the 100 USD notes and placed them on a piece of paper on the counter and then rubs them against the paper.  He lifts up the notes and on the paper is a green stain.

The green of the notes had rubbed off onto the paper.  Counterfeit currency!

At a guess I reckon there was maybe 40 or 50 notes in the wad.

Co-incidentally as we were leaving we ended up exiting the car park right behind the guy.  He was in a Corvette.

Making the Decision to Move

When you are thinking about moving to a new country you do a lot of reading. I cannot even IMAGINE how people contemplated moving to another place before the internet. Seriously… how would you have any idea of what was what if you couldn’t read the expat discussion groups? They were brave back in the day. Or maybe ignorance was bliss.

While you investigate this new place – long before you have made your final decision that you are prepared to give it a go – you have ‘moments’. Good ‘moments’. And not so good ‘moments. I’ll give you some examples of moments we experienced while researching life in Dubai (both having never even visited).

Slightly-not-so-good-moment: finding out that the same job has different rates of pay for employees depending on their nationality. For example, Phillipino maids are paid more that Sri Lankans maids even though they work the same hours and under the same conditions.

The reason this is not a strongly-not-so-good-moment is because;

a) as a Western-educated anglo-saxons we’re probably going to experience positive discrimination when it comes to salary in this regard, and

b) despite the fact that we don’t feel comfortable with that approach ourselves, we do try to operate under the assumption that the rest of the world does NOT need to hold the same values. (Stay tuned for the inevitable culture-shocked rant a few months down the track to see how long we can maintain this attitude.)

How-bad-is-it-really-gonna-be?-not-so-good-moment: Finding out that it is not uncommon for positions of employment to be advertised with a gender specification. Generally this applies to roles that are very traditionally male or female. For example, roles for Drivers (chauffers) are specified as male. Roles for maids are specified as female (and very often females without husbands. There is actually a pragmatic reason behind the no husbands rule which I can explain if anyone wants me to.) So too are nurses and receptionists specified as being female.

I haven’t seen an instance within the Information Technology sector (at least at the professional level) where gender has been specified. So I live in hope. However, this could just be because it is assumed that the candidates will generally be male. Although I do know of women holding these roles in Dubai.

Its not the prospect of not getting a job that really concerns me. What concerns me is the impact that my gender will have on me if I chose to continue as a consultant for a big-4. Is it an issue sending out a female consultant to clients? I don’t know.

If this IS an acceptable practise, how to I navigate my role as a woman amongst people that are not used to women being in authority? (Again… this might not even be the case and I admit I am working on a lot of untested assumptions here.)

Well, at least I have the benefit of having worked in a culture with different views than my home country when it comes to behavior towards women in the workplace. Australia is far more PC than Western Europe in these matters, and I see a lot of Australians quite shocked by behavior that is seen as normal by Western Europeans. It took some getting used to.

The kicker is… if I found the Netherlands confronting at times on this issue, how on earth am I going to deal with the Middle East? It will be interesting. I am hoping that the gulf between men and women is somewhat exaggerated by the Western media. A fact highlighted to me when a compatriot and friend of mine asked me how I was going to cope wearing a Burkha!

Really-good-moment: We were sitting on the couch surfing frantically one evening in Sydney when my husband turned to me and said, ‘They have Carrefour!’ We both looked at eachother for a minute with misty eyes for one and half seconds before I said, ‘I’m there!’

For anyone that hasn’t experienced the bliss that is known as a french supermarket, its probably for the best. They ruin you for all other supermarkets. (Okay, so English and Japanese supermarkets are pretty great too.) Aisle-upon-aisle of french cheeses, pates and charcuterie, Champagne and Cognac (at reasonable prices no less) and fresh, delicious fruits and vegetables. If I die and go to heaven there will be a perfect replica of the Carrefour supermarket in Lille, and I will never get fat eating my way through it.

I was amused to read that Carrefour in the UAE accepts the following methods of payment…UAE Dhs (that’s Dirhams), US Dollars, Saudi Riyals, Kuwaiti Dinars, Omani Ryals, Qatari Riyals, Bahraini Dinars and Euros.

All I can say is.. it will be nice to back in the ‘middle’ of the world again where there are strange and different places all around you, each with their own currency and history. I can’t wait!

One of four Carrefour Supermarkets in Dubai

One of four Carrefour Supermarkets in Dubai