Important News - Nov. 28
By Daniel at 28 November, 2009, 1:25 pm
“DUBAI (Zawya Dow Jones)–Debt-laden Dubai World’s unit Jebel Ali Free Zone Authority, or Jafza, faces on Monday a coupon payment on a 7.5 billion U.A.E dirham ($2.04 billion) Islamic bond in the first key test of whether it will default.
The Islamic bond, or sukuk, was issued in November 2007 through a Cayman Islands-registered company called JAFZ Sukuk Limited and pays 130 basis points over the six-month Emirates Interbank Offered Rate, according to Zawya.com.
The coming coupon payment is estimated to be between AED125 million and AED135 million, according to analyst calculations.”
“Nov. 27 (Bloomberg) — Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.
“One cannot rule out — as a tail risk — a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.
A default would lead to a “sudden stop of capital flows into emerging markets” and be a “major step back” in the recovery from the global financial crisis, they wrote.”
- 3) Comptroller’s budget red alert (New York)
“ALBANY — It’s hard to believe, but New York’s budget crisis is even worse than Gov. Paterson says it is.
State Comptroller Tom DiNapoli yesterday branded as “optimistic” Paterson’s projection that the state would end the year virtually bankrupt, with just $36 million in the bank, if the Legislature failed to close the looming $3 billion-plus budget deficit.
“We think the governor’s number is too optimistic,” said DiNapoli spokesman Dennis Tompkins.
“We think if no action is taken, the state will end December with a negative balance, about minus $3 million,” he said.”
“The dollar briefly fell to 84.82 yen — surpassing Thursday’s low and prompting the country’s finance minister, Hirohisa Fujii, to tell reporters in Tokyo Friday that he was “extremely nervous and watching the market carefully.”
“There’s no doubt the market has moved too far in one direction,” Mr. Fujii said. “Moves right now are extreme, and it would be possible to take appropriate measures.””
………Off till Monday. Maybe by then we’ll see what happens with Dubai and if the crisis spreads. Till then it looks like it’s goodbye steak and lobster for investors in Dubai and hello
- 5) Bankruptcies Up 34.5% (M.W.)
Bankruptcy filings in federal courts jumped by more than one-third this year, as businesses and individuals struggled to regain their footing in a weakened economy.
Wall Street has a lot to be thankful for. Fannie and Freddie now stand behind 80% of new home loans. Meanwhile, the FHA is underwriting loans at quadruple the rate.
In a worst-case contagion, Bank of America analysts wrote, “One cannot rule out a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s.” And not just emerging markets. “Dubai shows us that what we are now facing is a solvency issue, not a liquidity issue.”
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