Australian firms have Dubai exposure

Commonwealth Bank of Australia and construction company Leighton are among the Australian companies understood to have some exposure to Dubai World - the investment company which has requested a moratorium on the repayment of US$60 billion in debt.

Dubai shook investor confidence across the globe after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001.

Leighton Holdings, Australia's biggest construction company, said it is confident of recovering money it is owed in Dubai through its ownership of a 45 per cent stake in Al Habtoor Engineering.

"We are confident that we'll recover the money, but the timing is obviously uncertain," Leighton spokesman Justin Grogan said.

Leighton shares tumbled the most in more than three months on concern it will be hurt by Dubai's proposal to delay debt payments.

Australia's second-biggest lender, Commonwealth Bank of Australia, had an exposure to Dubai World, Australian Associated Press said on Friday. But the bank - the parent of New Zealand's ASB - would not comment on its position.

"It is not appropriate for the Commonwealth Bank to discuss confidential client information," a CBA spokesman said.

ANZ Banking said it has no material exposure but other Australian banks were not yet talking yesterday.

"We work with a number of well established relationships throughout the Middle East but we do not believe there will be any material adverse impacts to these relationships as a result of the moratorium announced by Dubai World," an ANZ spokesman.

Comment was still being sought from Westpac and National Australia Bank. Meanwhile Australia's biggest investment bank Macquarie Group said it had "negligible exposure" to Dubai World.

Dubai World's assets range from stakes in Las Vegas casino company MGM Mirage to London-traded bank Standard Chartered and luxury retailer Barneys New York through asset-management firm Istithmar.

The Dubai government's attempt to reschedule debt triggered declines in stocks worldwide that had been rebounding from the financial crisis.

Standard and Poor's estimated last month that Dubai state-related companies are due to repay some US$50 billion in debt over the next three years, which represent 70 per cent of the emirate's gross domestic product.

The ratings agency said on Wednesday that Dubai World's action amounts to a default and it downgraded companies in the group by several notches.

On the immediate horizon, Dubai World construction unit Nakheel was due to repay US$3.5 billion on December 14 in the form of maturing Islamic bonds.

But although the picture appears bleak, Dubai's oil-rich leading partner in the UAE, Abu Dhabi, is seen as likely to shore up the emirate.

"Abu Dhabi would not allow the financial collapse of Dubai," said Dubai-based analyst Ibrahim Khayat.

- AGENCIES