Dubai World and Abu Dhabi
In the news a couple weeks ago for failing to pay a $3.5 billion loan, Dubai World is making headlines again, this time because Abu Dhabi has agreed to lend the company another $10 billion. Before your conversation goes any further, you’re going to need to know what those two things are.
Dubai World is an “investment company that manages and supervises a portfolio of businesses and projects for the Dubai government across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading.”1 Quite simply, it’s huge, and the holding company has been employing a “borrow and build” philosophy over the past several years which has now landed them in debt to the tune of about $60 billion, with some estimating total liabilities of $100 billion! Dubai World owns stakes in companies ranging from retail to banks to casinos and more, so any default on Dubai World’s debt has worldwide economic consequences.
Abu Dhabi is the capital of the United Arab Emirates. As a thriving metropolitan hub for the country, this city has been a main lender to Dubai World, forking over about $25 billion to them this year alone.
Abu Dhabi at night
Read on:
Yahoo! Finance – Dubai gets $10B from Abu Dhabi to cover debt
Bloomberg.com – Dubai Debt Delay Rattles Confidence in Gulf Borrowers (from 11/26/09)
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