Debt-Ridden Dubai World’s $Delay Rocks Global Markets~Holiday KerPlunk
How many times have we heard… Too Much Too Fast–>It will take a major event to stop this low-volume, and steamed up market running on liquidity fired locomotion~ Even floor talk and those respected like Art Cashin the Director of Floor Operations for UBS Financial Services and a regular markets commentator on CNBC - has repeatedly stated concerns for the six month market moves and chart conditions which have set ready for a correction or sell-off due to any major event. Well, a tree has fallen in the forest of financials from the Sovereign World with limbs of exposure in many directions perhaps creating a perfect storm. Its enough of a buzz-saw to raise new concerns of instability, possible defaults, contagion and fear of the unknown of the further bad debt hidden on those balance sheets ~ The first major hit of bad news in quite awhile creates a wake-up call of What’s Next, and time to Take Profits!
But, we get this breaking news in the midst of a US holiday shortened week….Coincidence? Let’s voice some serious doubts on that~Think we gulped enough turkey for the week~US markets will close early today, and since its Friday makes you wonder how many bank flights we may get for a further hangover today?
24hr Ketchup=Red Red ShockWaves`
November 26, 2009
World stock markets fell sharply Thursday as investors fretted over the debt problems at Dubai World, a government investment company, and the continued fall in the dollar. Markets are usually quiet when Wall Street is closed for a holiday (NOT this time on Thanksgiving Day)
Trading in U.K. shares was halted on Thursday due to a technical hitch (lasted over three hours), although before the suspension investors had been selling bank stocks amid worries about exposure to Dubai debt. A warning from Dubai World that it may default on loan payments due next week started a run for cover, and TIMBER. Despite sources playing down the direct exposure, noting that banks would be required to issue statements if the potential problems were “material”, shares across the sector suffered falls which had that look of the financial crisis. A lack of clarity and full disclosure from those who would be directly hit seems to be adding to concerns and makes more fuel for the fire~
Dubai World, one of the emirate’s main state holding companies, said it was asking for a delay on maturities until at least May 30. It has about $60bn (£35.9bn) in declared liabilities and one of its subsidiaries, the “palm island” developer Nakheel, is due a $3.52bn Islamic bond repayment, plus charges, on December 14.
European Banks may have $40 billion Dubai exposure
(quite a list provided here of bookrunners and bond participants) use link for full article==>Barclays/ Deutsche Bank/Royal Bank of Scotland/BNP Paribas/ING Group/Lloyds Banking Group/ with Standard Chartered and HSBC known to have significant loan books in the Middle East
U.S. banks that have been involved in bond or loan deals in Dubai include Bank of America BAC, Citigroup C and J.P. Morgan Chase JPM
It’s worth remembering this worry could be overblown, as Abu Dhabi which is the true ATM, could easily step up and bail out Dubai. Afterall, Abu Dhabi’s sovereign wealth fund is said to have over $600 billion in assets. So…Is Dubai World Too Big To Fail??? Good question, and this morning from Market Watch comes this release==>Analysts at UBS said authorities will not have taken the decision to restructure Dubai World lightly and that there are three potential explanations for the decision. Firstly, UBS said, Abu Dhabi’s support for Dubai might be less generous than assumed. “Perhaps Abu Dhabi has forced Dubai to tackle the problem of excessive corporate debt ‘in-house’ first before extending more financial support,” the broker said. A second possibility is that corporate-sector problems might be more severe than assumed, UBS said. Thirdly, Dubai’s debt might be higher than the generally assumed $80 billion to $90 billion due to potential off-balance sheet liabilities, it added
Friday, November 27th
Gold for December delivery tumbled from a high of $1,195 an ounce to an intraday low of $1,130.10 an ounce in electronic trading on Globex, a decline of nearly $65, or more than 5%. Recently, gold fell $40.70, or 3.4%, to $1,146.30 an ounce.
The Dubai credit worries have weighed on commodities and equities over the past 24 hours, sparking long liquidation as investors takeoff some of their risk exposure. The dollar rose against its rivals as investors sold currencies perceived as risky-But, the rising YEN has continued to issue concerns with a 14yr high
05:16AM
04:51AM
Nov. 27, 2009, 4:51 a.m. EST
03:44AM
03:16AM
02:58AM
02:29AM
For an interesting and informative read on this see from Mish:
Total Bank Credit
More Deflationary Writeoffs Coming
