Federal funds to aid local companies - report

Dubai in talks to secure Federal aid, says the Financial Times, but a senior official reportedly denies the claim.

The sun sets over Dubai Marina. Dubai wants the Federal Government to provide loans to capital-starved companies, according to a British newspaper.

DUBAI // Dubai is in talks with the federal government to create a state-funded loan facility to help firms access finance as international capital dries up, the Financial Times said on Wednesday. The facility would be similar to the Dh120 billion (US$32.67 billion) central bank liquidity injection in October aimed at reinvigorating interbank lending in the world's fifth largest oil exporter, the paper said, citing unidentified Dubai officials. Speculation has mounted in recent weeks that Dubai government-linked companies will struggle to refinance their high-level of borrowing, forcing the emirate to sell off stakes in some of its prize assets. Dubai does not publish official figures on its debt but Fitch Ratings said earlier this month that government-owned entities owe about $70bn in foreign-currency bonds and debt. Moody's has said Dubai owed at least $47bn in debt, more than its gross domestic product. According to Reuters data, Dubai will need to address more than $10bn in maturing bonds and loans by the end of the first half of next year. The first tests will be a $1.725bn loan for Dubai Drydocks, which matures in January and more than $3bn for Borse Borse Dubai, the holding company for the emirate's two exchanges, which matures in February. The FT said the facility could be established as early as next week. The emirate has set up a high-level committee to look at how to deal with the financial crisis and has said it will introduce measures to restore confidence in the property sector. Nasser al Shaikh, director general of Dubai's Department of Finance and Mohammed al-Shaibani, director general of Dubai Ruler's Court, were not immediately available for comment. However, according to the website ArabianBusiness.com, Mr Shaikh has denied the report. It said he made his remarks at a business luncheon during which he discussed details of a new panel aimed at tackling the impact of the financial crisis on the emirate's economy. *Reuters

Speculation has mounted in recent weeks that Dubai government-linked companies will struggle to refinance their high-level of borrowing, forcing the emirate to sell off stakes in some of its prize assets. Dubai does not publish official figures on its debt but Fitch Ratings said earlier this month that government-owned entities owe about $70bn in foreign-currency bonds and debt. Moody's has said Dubai owed at least $47bn in debt, more than its gross domestic product.

According to Reuters data, Dubai will need to address more than $10bn in maturing bonds and loans by the end of the first half of next year. The first tests will be a $1.725bn loan for Dubai Drydocks, which matures in January and more than $3bn for Borse Borse Dubai, the holding company for the emirate's two exchanges, which matures in February. The FT said the facility could be established as early as next week.

* With Reuters However, a senior official has denied that Dubai is in talks with the federal government to create a state-funded loan facility to help firms access finance as international capital dries up, according to ArabianBusiness.com