Dubai Sukuk To Fund Airport Expansion
Dubai will use the USD$1.25 billion raised last week to fund the expansion of its airport and sees no risk to repaying creditors at its flagship conglomerate Dubai World on time, a senior Dubai official said.
"We will use proceeds from the USD$1.25 billion sukuk to fund Dubai International Airport expansion," Sheikh Ahmed bin Saeed al Maktoum, a close advisor and uncle to Dubai's ruler and a key figure in the emirate's recovery from its 2009 debt debacle, said in an interview on the sidelines of a Dubai travel show.
Sheikh Ahmed, a charismatic figure who has been the public face of Dubai in recent years, holds a host of top positions in the emirate including the chairman post at its largest bank Emirates NBD, Dubai World and at Emirates.
The emirate is steadily recovering from a 2009 debt crisis which saw Dubai World stun global markets with plans to delay repayment on USD$25 billion of debt. The conglomerate reached a deal in 2010 to repay lenders over five and eight years. Other state-linked firms are in the midst of restructuring debt.
"We (Dubai World) are committed to the plan set in 2010. Dubai World and its companies are making excellent revenues and we expect the debt to be paid on time. There's no need to extend debt when it falls due," said Sheikh Ahmed, who also heads the Supreme Fiscal Committee.
The emirate has been rehabilitating its reputation in the aftermath of the debt crisis, helped by a revival in trade and tourism and its safe-haven status amid the Arab Spring popular revolts.
Dubai has long touted its position as a travel hub and rapidly expanded Emirates.
The carrier, among the top 10 in the world by passenger numbers, and biggest customer of the Airbus A380 superjumbo, expects 2011 profits to be better than those in 2010 despite higher fuel costs, Sheikh Ahmed said. Fuel costs were about USD$2 billion last year, accounting for 40 to 43 percent of the airline's costs, he added.
The airline has a USD$500 million bond maturing in June.
"The Emirates cash reserve is good. It's excellent, I must say. We have AED4 billion dirhams in cash so we are capable of paying off the debt in June... but we're still weighing options," the airline's chairman said.