According to Bloomberg, Dubai Drydocks World (DDW) is offering 20 cents to the dollar to creditors on a USD1.4bn loan. The company long-standing talks with creditors to restructure USD2.3bn in debt had been stalled. As of January 2016, DDW was making efforts to break the stalemate. Around 65% of DDW’s debt is held by hedge funds (source: The National), after much of the debt was sold by the original creditors in the secondary market to hedge funds and other distressed asset traders. ENBD and Masreqbank are reported to be amongst the banks that are owed by DDW. While we believe the offer is likely to be a negotiating tactic by DDW to re-start the debt restructuring talks, and a debt plan is likely to presented to the creditors, the exposure is likely to be treated as an NPL by the banks’ involved and a cash settlement should drive recoveries. (Bloomberg, The National, Shabbir Malik)