Dubai Inc is a term used to refer to the Dubai government and its government-related entities. Dubai shook world markets in November when it said it wanted to request a freeze on debt repayments by its largest and most-indebted conglomerate, Dubai World. At the time, Dubai's total debt, including that of its state firms, was reportedly 80 billion dollars, with Dubai World owing 59 billion dollars.
EFG Hermes said it estimated Dubai Inc's capital market debt, including bonds and syndicated loans, to have risen to 96.6 billion dollars in 2009, including funds raised by the government to meet debt obligations. But it pointed to upside risks, which could take the total debt to 170 billion dollars, highlighting a lack of data on bilateral loans between Dubai Inc and banks.
"Bilateral lending ... is a bigger concern to us since the scale of lending could be very large and data are practically non-existent," the bank said. It estimated that the local Emirates NBD bank alone has roughly 24 billion dollars in bilateral loans to Dubai Inc. It also warned that there could be some capital market debt that is unaccounted for.
Meanwhile, EFG-Hermes said voluntary restructurings of Dubai Inc's debt are likely, as around 75 percent of Dubai Inc's debt, which falls due in 2010-2011, is from syndicated loans. Last month, international fears loomed over Dubai's ability to repay maturing Islamic bonds worth 4.1 billion dollar owed by Dubai World's property arm, Nakheel, when they were due on December 14.