Dubai - The Dubai government’s debt-freeze request could have a major impact on Informa’s events sector, according to UK City analysts.
Dubai World, the government-owned investment company behind the emirate’s rapid development drive, has asked its creditors for a six-month delay on repaying its debts.
The request, which “may be considered a [debt] default" according to global credit rating agency Standard and Poor's, is evidence that after six years of rapid growth, Dubai’s days of super spending are over. The now-humbled emirate was due to repay $3.5bn of its $59bn debt mountain next month.
The news rocked financial markets around the world, causing the UK's FTSE 100 index to drop by 3.2 per cent on Thursday, its biggest one-day fall since March.
“News of the debt standstill request by Dubai World continues a bad week for Informa,” Morgan Stanley market analyst Patrick Wellington tells Exhibition World. “The large scale events (mainly exhibitions) business of Informa is heavily weighted towards Dubai and the Middle East.”
Informa’s Dubai shows, which typically take place in the Dubai International Exhibition Centre in the early part of the year, include Cityscape; perhaps the largest property show in the world, as well as Middle East Electricity and Arab Health. “These are some of the most profitable events in the Informa portfolio,” says Wellington. “We believe that Dubai-specific shows are worth around £75 million (US$124 million) each year and have continued to grow fast.”
And while Informa reported bookings for its shows in the rest of the world were up 12 per cent for 2010 at the half year, Morgan Stanley’s own forecasts now assume zero revenue growth for the organiser’s international events in 2010.
“The Dubai situation, which comes after a sharp economic downturn through 2008-9 could further impact these numbers,” adds Wellington.
