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WRAPUP 2-UAE officials assure on banks, Dubai debt woes

By Martin Dokoupil and Raissa Kasolowsky ABU DHABI, May 10 (Reuters) - UAE officials offered assurances that talks on a $24.8 billion Dubai debt deal were going well and that no more major corporate restructurings were expected after Dubai, helping to send financial shares higher. Central Bank Governor Sultan Nasser al-Suweidi said the country's banks were healthy and well capitalised and that he saw no impact on the UAE economy from the Greek debt crisis. European leaders and the IMF unveiled a $1 trillion emergency facility designed to cauterise the eurozone wound. Dubai, the second largest member of the UAE federation after Abu Dhabi, is wrestling with a debt burden estimated at $101 billion, of which authorities are attempting to restructure nearly $25 billion under the Dubai World holding umbrella. Concerns persist that other Dubai-related entities, namely Dubai Holding, could struggle with their debt burdens. Dubai Holding is one of the Gulf Arab emirate's three conglomerates along with Investment Corporation of Dubai and Dubai World which is in talks to restructure nearly $25 billion in debt. Finance ministry undersecretary Younis al-Khouri moved to soothe concerns about the state of the country's financial sector, which faces heavy losses from Dubai-related writedowns. "All the banks are well capitalised," Khouri told journalists. Markets welcomed a weekend Greek rescue plan and the official UAE reassurances, helping Dubai's index close up 1.6 percent with its first gain in four sessions, in line with a rally in global stocks. Abu Dhabi banks led the UAE capital's index to end up 1.56 percent, with National Bank of Abu Dhabi -- the country's largest lender by market capitalisation -- rising 2.53 percent and rival Abu Dhabi Commercial Bank closing 4.5 percent higher. "Short-term, (the package) is a shot in the arm for sentiment in European and global markets -- they priced in concerns (about a European debt crisis), so it's only logical to price in improved sentiment," said Ali Khan, managing director and head of brokerage at Arqaam Capital. Suweidi said the UAE central bank does not expect to see more large-scale corporate restructuring similar to Dubai's debt woes. The Financial Times on Monday reported three companies within Dubai Holding, a state-controlled conglomerate like Dubai World, have engaged advisers ahead of a potential plan to restructure billions in debt. Asked whether there would be any further large scale corporate restructuring in the UAE, Suweidi said: "No, these are the largest." Analysts said another restructuring would not come as a surprise and Dubai Holding, in particular, would not have the same negative effect as Dubai World's restructuring. "Dubai Holding issued securities that had longer term maturities coming due in 2013 and 2014," said Khuram Maqsood, managing director at Emirates Capital. "The refinancing obligations are farther down the road. The company is doing the right thing in taking steps to better position in advance of its obligations coming due." DEBT LAW In addition, Suweidi said Greece's debt woes will not affect the UAE. "There's no link between Greece and the GCC countries. Greece is on the one continent and the GCC is on another continent. There is no link in terms of financial flows, no strong links, nor strong economic relations," he said. Separately, the UAE confirmed plans to issue a comprehensive law governing the issuance of public debt and establish a debt management office this year, before considering any issues of sovereign bonds, the minister of state for finance said. "The first thing is that the law of public debt needs to be issued...after that we will consider the matter of issuing bonds," said Obaid Humaid Al Tayer, minister of state for finance said. "The law will be passed this year." Al Tayer said after a law is passed, a debt management office will also be set up during the year. Any sovereign issues will take place after completion of law and the setting up of office, he added. (Additional reporting by Shaheen Pasha; Writing by Thomas Atkins; editing by Tony Austin) Keywords: EMIRATES CBANK/ (cynthia.johnston@reuters.com ; +971 4 366 4222; Reuters Messaging: cynthia.johnston.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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