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Abu Dhabi Agrees To Fund $10 Billion For Dubai World Debt

Tyler Durden's picture




 

From Bloomberg: The government of Abu Dhabi and the Central Bank of the United Arab Emirates agreed to provide $10 billion to the Dubai Financial Support Fund, allowing Dubai World to repay $4.1 billion of Islamic sukuk bonds that are due today, the government of Dubai said in an e-mailed statement.

Dollar haters everywhere rejoice for Bernanke and for global moral hazard.

 

 

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Mon, 12/14/2009 - 00:48 | 162835 SilverIsKing
SilverIsKing's picture

Well I'm glad that's over.

Mon, 12/14/2009 - 11:12 | 163172 BRAVO 7
BRAVO 7's picture

BUT THERE ARE ARE MORE DOMINOES IN THE CHAIN REACTION.

Prepare for more nation-states, which are now to be foreclosed and  liquidated in a wave of sovereign defaults.You just thought we owned America.The orientals will be picking our bones in foreclosure like so many vultures on a shopping spree. according to the bible, "the rich ruleth over the poor, and the borrower is servant to the lender." Our so-called leaders will be all too willing to sell us out even further (re: calif. garage sale), to insure their parasite / host status over Americans. And these traitors will crouch down and lick the boots of America's new financial overlords. From the land of the free to perpetual debt slaves in less than a generation.

The number of countries which are currently in jeopardy, due to their own bankruptcy is extensive. On Nov. 30 alone, the following nations were mentioned: Ireland, Greece, Hungary, the Baltic States, Ukraine, Pakistan, Romania, Bulgaria, Spain—and the United Kingdom and the United States. The least unto the greatest.

  You might want to read what you can on Peter Bernholz, an economic academic,( book: Monetary Regimes And Inflation) who has spent all of his adult life researching the collapses of the 28 largest fiat money systems.The one salient point of his work might be distilled into this; all these fiat currencies had in common this tipping point into oblivion, WHEN THE DEFICIT EXCEEDS 40% OF EXPENDITURES .

  The U.S. of A  BORROWING is now at this level, and the congress and senate are still digging in the hole, 2 trillion more on cap extension  just last week and more in the pipeline. When the other nations can't or will not buy any more of our debt, the curtain comes down on this pathetic America. The fat lady is tuning up in the wings, making ready to sing.

God have mercy on u.s.

 

Mon, 12/14/2009 - 00:52 | 162841 Molon Labe
Molon Labe's picture

And how much have they lost in value on securities traded on the UAE exchanges since Dubai defaulted?  Maybe this is the cheap way out.  TBTF I guess.  Moral hazard, indeed.

Mon, 12/14/2009 - 00:56 | 162846 chindit13
chindit13's picture

Guess the markets had not really dismissed Dubai after all, since this announcement was met with an immediate 350 point Hang Seng rally and a big dollar fall.  Seems the addicts got their fix of Moral Hazard Relief.

After about $30 trillion worldwide to stem the overall crisis, I guess a mere $10 billion makes Dubai a pretty cheap date.

Mon, 12/14/2009 - 00:56 | 162853 SilverIsKing
SilverIsKing's picture

Yup, and US Equity futures are also up big now.

Mon, 12/14/2009 - 02:00 | 162932 Anonymous
Anonymous's picture

Yeah, I saw all the Asian indices spike all of a sudden and so I went sniffing around the newswires figuring there was a bailout or CB action somewhere that just happened.

Mon, 12/14/2009 - 01:02 | 162858 Cursive
Cursive's picture

I guess that rumor out on Friday was the real deal.  This may already be priced in, considering that the financials were strong in Friday's afternoon session.  Then again, maybe not.

Mon, 12/14/2009 - 01:05 | 162859 Cyan Lite
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Another excuse to rally.  Ride some DEC calls higher!

Mon, 12/14/2009 - 01:08 | 162865 Anonymous
Anonymous's picture

***BREAKING NEWS***
the Central Bank of the United Arab Emirates has made a statement:
"Just kidding".

Mon, 12/14/2009 - 02:05 | 162939 Hephasteus
Hephasteus's picture

Haha. Remember when you said you were shipping us our gold and it never came.

Haha. The check is in the mail!!! LOL

Mon, 12/14/2009 - 01:10 | 162868 Anonymous
Anonymous's picture

I wonder how many people made a ton of cash on this, scooping up the sukuk from Thanksgiving's deep, black friday discount.

Mon, 12/14/2009 - 01:13 | 162871 Fat Bob
Fat Bob's picture

All in. Never Goin Down Again. Why would it? Nothing fails except the Average Joe

Mon, 12/14/2009 - 01:14 | 162874 chindit13
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I note the last line of the press release where it says that Dubai's name will be changed either to just plain Dhabi, or else bin Dhabi.

Mon, 12/14/2009 - 01:14 | 162876 Anonymous
Anonymous's picture

look, tyler.

its gold bitches......

Mon, 12/14/2009 - 01:14 | 162877 Hephasteus
Hephasteus's picture

This is win for our subprime ministers.

Too bad it isn't 10 trillion dollars. Because this is just a can kick.

Mon, 12/14/2009 - 01:19 | 162886 Anonymous
Anonymous's picture

so the American way of privatized profits and socialized losses is spreading across the Arab world.

Mon, 12/14/2009 - 01:23 | 162891 carbonmutant
carbonmutant's picture

Looks like the price of Gold is headed back up.

I guess Dubai doen't have to sell anymore.

Mon, 12/14/2009 - 01:27 | 162895 Michael
Michael's picture

So who in Abu Dhabi loses?

Mon, 12/14/2009 - 01:33 | 162909 SilverIsKing
SilverIsKing's picture

McDonalds of course.  Back to Lugers.

Mon, 12/14/2009 - 01:41 | 162915 Number 156
Number 156's picture

The Nakheel Group has created a colossal FAIL.

An Island made of sand that is sinking into the ocean,  in the midst of a global economic downturn.

Somebody looses, except for the casino, of course.

Mon, 12/14/2009 - 06:34 | 163037 BorisTheBlade
BorisTheBlade's picture

No one? Abu Dhabi was playing its cards quite carefully and all the time between the moment Dubai World announced its default and the moment Abu Dhabi announced its bailout, I'm sure there were negotiations behind the closed  doors as to which assets of Maktoum family will go to Nahyans. Dubai loses - assets and part of its sovereignty to A.D. and make no mistake, Nahyans did not pay 100 cents on the dollar.

Mon, 12/14/2009 - 01:28 | 162898 Anonymous
Anonymous's picture

Strange, I know that some of the Japanese contracting firms working on their projects have not been paid.
Something is afoot at the circle K.

Mon, 12/14/2009 - 01:29 | 162901 Anonymous
Anonymous's picture

Or it gets shrugged off tomorrow

Mon, 12/14/2009 - 01:30 | 162905 Anonymous
Anonymous's picture

50/50 says that this will be the technical blowoff to throw us down into the consolidation pattern on the indexes, and possibly a further sell off from there. Recall this is option expiration week, and so far the Santa Clause rally has been rather flat.

Mon, 12/14/2009 - 01:43 | 162917 Michael
Michael's picture

There is not going to be a Santa Clause rally. Mother Nature has spoken.

Mon, 12/14/2009 - 01:33 | 162910 Anonymous
Anonymous's picture

Ok why have such goobledegook announcement
These guys continue to be as non transparent as they can

14 Dec 2009 - 09:05:07
Nakheel Development Limited - Announcement

Nakheel confirms that it will honour all obligations related to the 2009 Nakheel Development Limited Sukuk using funds that will be provided by the Dubai Financial Support Fund. In accordance with the terms of the Sukuk, the repayment will occur within the next 14 days.

Mon, 12/14/2009 - 02:04 | 162937 ZeroPower
ZeroPower's picture

K so that leaves Dubai World with $50B more they'll need later; in a 2nd bailout so to speak.

Where have we seen this before!

Mon, 12/14/2009 - 11:32 | 163192 Anonymous
Anonymous's picture

I agree with #162877 that this is just kicking the can down the road. Does anyone have a schedule of the debts and due dates?

Mon, 12/14/2009 - 02:07 | 162940 Anonymous
Anonymous's picture

Can anyone tell me what recent USD strength and gold drop is due to, other than Dubai? I know Gold was a technical sell as well. What is leading what???

Mon, 12/14/2009 - 02:09 | 162944 RobotTrader
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From shorty at Cap Stool..

Mon, 12/14/2009 - 02:16 | 162950 The Rock
The Rock's picture

More twists and turns than a soap opera, more head fakes than Kurt Rambis.  I guess Abu Dhabi blinked and became a lender of last resort after all...

Mon, 12/14/2009 - 03:10 | 162979 Boston Wealth
Boston Wealth's picture

http://www.bostonwealth.net/2009/12/14/dubai-musings-told-you-so/

 

Two weeks ago I stated in a post titled “Dubai Musings”, :

Yes and the ruler of the UAE told the international press two month ago to STFU as the situtation was under control. Heck its wealthier and more conservative emirate state of Abu Dhabi will just bail them out. After all the UAE consists of seven emirates of which Dubai and Abu Dhabi are the two most recognized.  Futhermore the UAE’s state motto is “God, Nation, President” so whatever the current ruler of UAE say goes as I am sure he does not want to see egg on his face and will just instruct Abu Dhabi to bail out Dubai”

 

 

Mon, 12/14/2009 - 06:17 | 163034 JuicyTheAnimal
JuicyTheAnimal's picture

awwwwe stinkers dude....I was hoping to pick me up one of them islands at the trustee sale on the cheap.  These get rich in real estate books ain't working so good for me.   

Mon, 12/14/2009 - 06:25 | 163035 JuicyTheAnimal
Mon, 12/14/2009 - 07:08 | 163046 Sugar Bear
Sugar Bear's picture

euro,gold,copper,  all not acting well...look for only a slightly positive open @930 am...followed by a .7% drop today   ( a crash in real terms)

Mon, 12/14/2009 - 07:31 | 163054 whopper
whopper's picture

triple-digit rally coming....moody's says it's triple AAA 

Mon, 12/14/2009 - 07:42 | 163057 Zombie Investor
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We were assured by CNBC and company that the Dubai bonds were of no concern to the world economy and the markets recovered after an initial drop.  Will CNBC report today that this $10b payment is meaningless and that the markets should not be rallying on the news?

Mon, 12/14/2009 - 07:51 | 163062 Sugar Bear
Sugar Bear's picture

Larry Summers laid out the plan yesterday...step by step...thats what this is , a systematic plan(scheme)  

We have no exposure to Dubai, unless it is going up...

Joe Kernan becoming a cheerleader also...

Mon, 12/14/2009 - 07:48 | 163059 Anonymous
Anonymous's picture

My questions are:

1) Why did Abu Dhabi wait till now? Why not two weeks earlier for this announcement? FT Alphaville had an interesting comment on how Dubai could've bought their own debt on the cheap during the last 2-3 weeks ... voila buy back your own debt and extinguish it.

2) Why would other developed and emerging markets rally? I understand animal spirits are up, but do Greece, Spain, New York state, etc. have oil rich neighbors to bail them out?

Mon, 12/14/2009 - 08:39 | 163080 AAA
AAA's picture

Dudes of 0,

Hats of to Marla for pointing out the possibility of "brotherly support"

I don't understand the logic of paying off Nakheel debt, will Dubai payoff Nakheel and let the other DW bonds sink. After all they have got just $ 10 bn from "Abu Dubai", will they not use it to negotiate with creditors

and what is this thing with courts,

let us see DIFC will decide on Dubai debt, how independent can they be!

http://www.mysinchew.com/node/32817

 

 

" A circumspect John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole in Riyadh said, "It will take time for the implications to unfold. I highly doubt this kind of money has no strings attached.”"

http://www.themoneytimes.com/featured/20091214/abu-dhabis-10-billion-mag...

Lets start a "string" speculation

I say Emirates and Emaar are the bride price (do you seriously believe that the Emaar merger did not happen due to re evaluation of the strategic fit)

Mon, 12/14/2009 - 09:01 | 163091 FischerBlack
FischerBlack's picture

"We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheikh Ahmed bin Saaed al-Maktoum said in the statement.

 

Now, I wonder which market principles and business practices he's referring to, here? Hm?

Mon, 12/14/2009 - 09:05 | 163094 Bearish Spirits
Bearish Spirits's picture

Another Monday, another piece of news to shank the dollar and drive up the markets to keep those weekly charts looking nice and pretty.  Oh, but I'm sure it's all just mutual funds at the beginning of the week...

Mon, 12/14/2009 - 09:14 | 163098 FischerBlack
FischerBlack's picture

Added, this bailout has little if anything to do with helping Dubai meet its obligations to its creditors. This is a bailout of the Al-Maktoums, make no mistake, buying them some time as they re-write their bankruptcy code in a way that puts everything they have accmulated in over a century of rule completely out-of-reach. All is not as it appears.

Dubai has announced a bankruptcy law that it said could be used in case Dubai World and creditors failed to reach an agreement on debt maturing in the future.

"Dubai will announce a comprehensive reorganisation law, a framework that is based upon internationally accepted standards for transparency and creditor protection," Sheikh Ahmed said.

"This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations."

 

http://www.cnbc.com/id/34411229

Mon, 12/14/2009 - 09:55 | 163132 Cursive
Cursive's picture

@FischerBlack

Nice catch.  I see the euro does not look so healthy this morning, the EUR:USD having given back most if not all of its rise on the announcement last night.  The spinning plates can only be kept in the air for so long.

Mon, 12/14/2009 - 09:55 | 163130 Racer
Racer's picture

Now isn't it most odd that the futures go up on this news when they failed to fall when there was a problem,... oh must be the pumpers that kept it up before and they forgot to turn off the pressure

Mon, 12/14/2009 - 09:55 | 163131 Anonymous
Anonymous's picture

Good to know that they can continue to securitize high-rise whorehouses, royal torture chambers and gaudy islands visible from space with the naked eye, built with slave labor kept under conditions that would make the pharohs of antiquity quail in shame.

Mon, 12/14/2009 - 10:23 | 163141 virgilcaine
virgilcaine's picture

UAE calling Dubai a 'global financial center' ,  they are seeing a mirage maybe.

10 Billion is the down pmt.. Again couldnt happen to a nicer bunch, swarmey shieks and Eu investment banks.  :)

 

may they strike in face with a monument to Dubai world. Throw a shoe ? something..

Mon, 12/14/2009 - 11:29 | 163188 trav777
trav777's picture

I think they just didn't want to FAIL the 'islamic bonds' because they are trying to start their own pretend muslim financial ponzi bullshit

Hell, Mohammed stole about everything else from joos, why not money usury too under the guise of "no interest"?

They'll default on the dhimmi bonds

Mon, 12/14/2009 - 13:32 | 163334 Windemup
Windemup's picture

Has anyone read John Perkin's "Confessions of an economic Hit Man"?

Seems to me that they have captured Abu Dhabi with a mountain of debt they will never be able to pay.

 

It fits the pattern.

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