Dubai said Wednesday it has no plans to restructure billions of dollars of state-linked debt next year, in an apparent effort to quiet suggestions it is facing new financial difficulties.
The statement issued by the emirate's official media office followed media reports and assessments by credit rating firm Moody's Investors Service a day earlier that renewed questions about Dubai's ability to tackle its more than $100 billion pile of debt.
Moody's estimates Dubai and its government-backed companies have some $13.8 billion in bank and bond debt coming due before the end of next year. The rating firm raised particular concerns about the financial sustainability of three companies that owe a combined $3.8 billion in 2012.
Dubai's credit problems sent tremors through global markets two years ago when the city-state acknowledged it couldn't repay all its debts.
It got through that crisis thanks to $20 billion in emergency aid from its neighbor Abu Dhabi and by getting its creditors to grudgingly accept new terms on tens of billions of dollars of debt linked to its Dubai World conglomerate.
Abu Dhabi and Dubai are the largest and richest of the seven sheikdoms that make up the United Arab Emirates, an OPEC member that is the largest Arab economy after Saudi Arabia.
Dubai is in ongoing talks with lenders to restructure a further $11.2 billion, according to Moody's.
Wednesday evening's statement by Sheik Ahmed bin Saeed Al Maktoum, chairman of Dubai's Supreme Fiscal Committee, suggested the emirate doesn't want to pursue the restructuring route with debt coming due in 2012.
He said there was no truth to rumors that the government might restructure debts owed by its subsidiary companies next year.
Sheik Ahmed acknowledged, however, that Dubai may need to refinance part of its debts — a move he described as a customary financial practice. Doing so would likely allow Dubai to avoid defaulting on its obligations without necessarily coming up with all the cash it needs to cover its bills.
The government added that it is fully prepared to support its state-linked companies through a range of different options.
On Tuesday, one of the indebted companies cited in the Moody's report vowed to repay $500 million it owes early next year. The firm, Dubai Holding Commercial Operations Group, said it "enjoys a healthy revenue stream" and will use that cash flow to cover its debts.