Dubai World Group, the company that funded developments such as Palm Jumeirah has had to admit that it cannot pay its debts, and has asked its investors to accept a six month delay on repayments while it attempts to find funds.
Accountancy group Deloitte have been called in to help with finances with the estimated debt of approximately £36bn.
Dubai’s government said in a statement: “Dubai World intends to ask all providers of financing to Dubai World and Nakheel to ‘standstill’ and extend maturities until at least May 30, 2010.”
Ian Stannard, currency strategist at BNP Paribas said, “There are concerns regarding the extent of the exposure of the UK banks to Dubai, hence sterling is coming under pressure.”
Dubai was among the most dramatic victims of the credit crunch, with property prices halving from their highs in September 2008, leaving a huge overhang of debt.
Related posts:
UK Firms with Dubai exposure shake of the jitters: http://www.telegraph.co.uk/finance/markets/6668489/UK-firms-with-Dubai-exposure-shake-off-jitters.html
That didn’t take long. I notice that this story was just a foot note on the news last night.