Dubai strains to restructure debt

Dubai World, the state owner of troubled developer Nakheel, is trying to persuade bank creditors to restructure up to $12bn of its loans, an indication that the emirate is starting to grapple with the challenge of unravelling its $80bn-plus debt pile.

Hit hard by the credit crisis, Dubai is showing signs of recovery on global economic optimism, yesterday launching the Arab Gulf states' first metro system.

However, restructuring the emirate's government-linked debts remains a top priority as the government seeks to assure a rebound for its trade, tourism and services-focused economy and recover from the precipitous property crash.

Bankers close to the talks say Dubai World is gauging interest from about 10 banks for a restructuring of outstanding syndicated debt and bilateral loans for the holding company and two of its troubled entities, Nakheel and leveraged investment arm Istithmar.