Abu Dhabi's $10 billion financial aid to Dubai to meet debt obligations was in the form of bonds, the UAE foreign minister said in remarks to a Jordanian state news agency.
Abu Dhabi provided Dubai, a fellow member of the United Arab Emirates, with the lifeline yesterday, when a $4.1 billion Islamic bond issued by Dubai property developer Nakheel fell due. The loan boosted markets by easing concerns about a potential debt default.
"The aid did not come late and was in the form of bonds," Sheikh Abdullah bin Zayed al-Nahayan told the agency, Petra today, on the sidelines of a Gulf Arab summit in Kuwait.
"They are debt instruments that would be paid back and carry interest just like loans."
Sheikh Abdullah expressed "optimism about the capability of Dubai to reach satisfactory solutions with its creditors -- international banks", Petra said.
"Those who question the solidarity of the seven (UAE) emirates do not know the truth of the federation," he said.
Dubai said on November 25th that it had requested a standstill on $26 billion of debt owed by state-owned conglomerate Dubai World, the owner of Nakheel, raising concerns about the health of the UAE economy and the support Dubai had from Abu Dhabi.
The lifeline helped Dubai World repay the property unit's bond.
The move answered doubts about the strength of the union and the dynamics of support that Abu Dhabi has traditionally extended to fellow federation members.
Dubai, a regional business and tourism hub, is the second largest member of the UAE, the world's third-largest oil exporter.
The rest of the funds will be used to support Dubai World until the end of April. With the bond repayment out of the way, Dubai World must now agree a standstill with creditors to give it time to restructure. If it fails to reach an agreement, it may file for bankruptcy protection.
Reuters