In spite of the United Arab Emirates federation attempt to shore up Dubai‘s troubled financial system, the Denko Group warns that the region‘s credit crisis is far from over.
Estimates by the International Monetary Fund show Dubai is currently at $108 billion in debt. Add on the burden of the various state owned or linked firms such as Dubai World and there is an obvious uphill battle. The problem is compounded by the fact that Dubai generates very little of its funds from oil.
Press releases from the Dubai government use language like ´urgent action‘ and ´clear framework‘. The problem remains, however, that the general perception with investors is that the financial system is not transparent enough. This contributes to low confidence with debt-rating agencies and investors alike. The Denko Group strongly advises against considering even deeply discounted investments from the region except on the advice of your portfolio representative.
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