The pace of increase appears to have slowed this year, however, rising by an estimated $25bn in H108, after growing by 70% in 2007.
In the absence of officially published external debt data, Fitch compiles its own estimates of the external debt of individual emirates and the UAE as a whole. These are derived from top-down and bottom-up estimates using data from the UAE Central Bank (CBUAE), the Bank for International Settlements and private sector data providers.
60% of the UAE’s total external debt is owed by its banks, with total external liabilities of just below $90bn gross and $40bn net in March 2008. However, this figure is likely to have fallen in the second half of the year as speculative inflows anticipating a revaluation of the UAE currency have been unwound. Nevertheless, with nominal lending growth outpacing deposit growth, banks switched from being net external creditors to net external debtors in 2007. Fitch also notes that approximately 20% of UAE bank external liabilities represent non resident deposits, reflecting the country’s increasing role as a regional and international financial and business centre. The UAE’s top four banks by assets, accounting for over half domestic banks’ assets, are majority state-owned.
Non-bank debt is highest in Dubai, estimated at just under $70bn at September 2008, followed by Abu Dhabi, with an estimated $50bn for the same period. Individual emirate governments have minimal sovereign debt outstanding. Abu Dhabi is the only emirate with an outstanding Eurobond (a $1bn benchmark issued last year). Most non-bank debt is owed by public sector entities. Abu Dhabi’s public sector foreign currency debt amounts to an estimated $25bn and Dubai’s an estimated $51bn, amounting to half and three-quarters respectively of total non-bank debt outstanding. Near term maturities are highest for Dubai, with $11bn of loans maturing in the final quarter of 2008. Around half of this has already matured or been refinanced. In 2009, Abu Dhabi entities have more debt maturing than those in Dubai (just over $8bn and $5bn respectively), the majority of it public sector. This represents only a small fraction of Abu Dhabi’s projected budget surplus, even at current oil prices. Dubai’s maturities peak in 2011 at around $20bn.
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