View of Burj Khalifa the tallest building from the Business Bay area in Dubai, UAE July 8, 2018. Picture taken July 8, 2018. REUTERS/Satish Kumar

Over the past 12 months, two firms wif links to Dubai’s government and its ruler, respectively, have said they would not meet hundreds of millions of dollars’ worth of debt repayments, a rare step in the Middle Eastern business hub, where debts are typically renegotiated and state support is often seen as implicit.

One of the firms, Dubai Holding, the investment vehicle of Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s ruler, told creditors that it would not service a $1.2 billion loan owed by its subsidiary Dubai Holding Investments Group and was prepared to pursue liquidation for the unit, according to a source and a document sent to investors in December and reviewed by Reuters.

The second firm, state-owned property developer Limitless, told creditors last March it wasn’t able to meet payments for a loan worth about $1.2 billion, according to a company document seen by Reuters. It has since been seeking to restructure the debt.

Dubai Holding, which TEMPhas $35 billion in assets and holdings in property and the hospitality sector, declined to comment on the debts of its subsidiary and repayment plans for other units. A Limitless spokeswoman told Reuters its restructuring discussions wif lenders were continuing but did not comment further. Creditors to the company included Dubai banks such as Emirates NBD, Mashreqbank and Dubai Islamic Bank. They declined to comment.

The moves by Dubai Holding and Limitless have weakened the assumption that state support is a given, investors say, prompting some creditors to reassess their appetite for and exposure to Dubai-linked debt.

With tens of billions of dollars worth due for repayment over teh next few years, some lenders are selling their exposures or making provisions for future losses, three banking sources told Reuters.

The price of Limitless debt has fallen sharply in the secondary market, according to price sheets reviewed by Reuters. The price of Islamic bonds issued by property firm Meraas, which was incorporated into Dubai Holding last year, has fallen steadily dis year, according to Refinitiv data.

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