Morgan Stanley analysts: Dubai debt restructuring could reach $46.7bn

8 December 2009

Morgan Stanley analysts have predicted the cost of Dubai's debt restructuring program could almost double from its currently mooted $26 billion.

The analysts, Paolo Batori and Mohamed Jaber, reported that government-owned Dubai World may be joined by several other organizations in the state in restructuring debt, leading to around $46.7 billion of assets potentially being frozen for an uncertain period of time.

Among the companies they predicted may need the assistance were Dubai Holding LLC, Borse Dubai and Dubai Sukuk Center, reports Bloomberg.

Other firms will potentially "announce debt restructuring plans over the near term", said the Morgan Stanley report.

"We believe that a haircut on the external debt at risk in the area of 40 – 50 per cent is necessary to have a notable long-term favorable impact on public debt dynamics."

Earlier this week, regional and international banks met with Dubai World to begin to thrash out the details of the proposed debt restructuring.

The company is seeking a six month delay to the payment of some its debts.

By Asim Shah

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