Dubai World's $26bn debt repayment plan

DUBAI World will offer banks a single proposal to repay in full the $26 billion debt it owes to some 97 creditors, including Royal Bank of Scotland.

Officials from Dubai and neighbouring emirate Abu Dhabi have been working with restructuring experts to devise a viable debt restructuring plan.

Dubai World, the state-controlled holding company, will propose to repay the debt over seven years, it was claimed yesterday by broadcaster Al Arabiya.

Implementing the proposal would cause banks to book losses this year due to the differences between the proposed rate and those in the original contracts.

Dubai shocked the market in November when it said it would ask creditors to delay repayment on debt linked to Dubai World.

A $10 billion bailout from Abu Dhabi helped it avert an embarrassing default on an Islamic bond linked to developer Nakheel, builder of the artificial palm-shaped islands off the city's coast.

The firm, which ringfenced key assets such as ports operator DP World from the restructuring, has been in talks with a committee that represents the 97 creditors. The panel is made up of Standard Chartered, HSBC, Lloyds, Royal Bank of Scotland, Emirates NBD and Abu Dhabi Commercial Bank, which are believed to have two-thirds of the total exposure.

A seventh lender, Bank of Tokyo-Mitsubishi, a unit of Mitsubishi UFJ Financial Group, joined the panel this year.