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 The debt is being rolled over for five years at a 1 percent annual
interest rate, WAM said in an official statement.
The roll-over covers a $10 billion, five-year loan which was offered
to Dubai by the Abu Dhabi government through two state-owned banks,
and $10 billion of five-year bonds which Dubai issued to the UAE
central bank.
The agreement, which had been expected by financial markets, will
enable Dubai to continue spending heavily to develop itself as a
regional center for finance, trade and tourism.
Dubai, one of seven emirates in the UAE, obtained the aid in 2009
after the global credit crisis caused its real estate market to
crash, threatening to force some of its state-linked firms to
default on billions of dollars of debt.
The neighboring emirate of Abu Dhabi, which is the capital of the
UAE and has vast oil wealth, stepped in to bail Dubai out. Dubai is
now recovering strongly, with residential property prices up over 20
percent last year and its stock market <.DFMGI> rallying about 140
percent since the end of 2012.
This month's roll-over deal "is part of the signatories' attempts to
reinforce the competitiveness of the Emirati economy regionally and
internationally," WAM said. "It also reflects the positive
developments that the local economy of the emirate of Dubai has seen
in recent years."
Dubai's $10 billion of debt to the UAE central bank had been due to
mature this month; in February, Reuters quoted sources familiar with
the matter as saying an agreement to roll over that amount had been
reached.
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The other $10 billion of aid, extended through National Bank of Abu
Dhabi <NBAD.AD> and Abu Dhabi's Al Hilal Bank, was due to mature in
November this year.
Dubai appears to be getting considerably more attractive terms in
the roll-over than it obtained during the crisis in 2009; the
original bonds issued to the central bank carried a 4 percent
coupon.
Some of Dubai's biggest government-related entities (GREs) are
working through debt restructurings launched after the crisis, and
will have to sell assets to meet repayments in the next few years.
The International Monetary Fund estimated in January that Dubai and
its GREs faced about $78 billion of maturing debt between 2014 and
2017; this month's agreement takes care of more than a quarter of
it.
(Reporting by Andrew Torchia; additional
reporting by Sami Aboudi; editing by David French and Rosalind Russell)
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