Wednesday, December 17, 2008

Citi mending fences with Dubai?

That's the way the Financial Times characterizes Citigroup's $8B loan to Dubai:
Officials said the $8bn (€5.9bn, £5.2bn) figure relates to existing financing efforts over the past year and does not refer to new financing as the emirate seeks to navigate its way through troubled credit markets.

The Citi announcement, an apparent attempt to rebuild bridges with the Dubai government, also follows media reports last month that suggested the bank was seeking to sell on at a discount some of its exposure to Dubai debt.

appears to be a historical account of what has already been done,”said one banker of Monday’s statement.

Dubai officials remain confident that they will be able to tap more financing from institutions such as Citi over the next year as outstanding debt starts to mature.

Dubai’s biggest ticket financing in the past few months has been the $6bn syndicated loan to Investment Corporation of Dubai, the state holding company, to which Citi is said to have contributed $500m.
My emphasis. Oh, so the announcement was about loans Citi had made to Dubai over the "past year" -- contrary to the impression I got from reading the Gulf News. A new loan would be a strong expression of confidence in Dubai's ability to repay in the current environment. An announcement about past lending is not so strong a signal.

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