The likelihood of a debt restructuring of Dubai Holding, a conglomerate owned by Dubai's ruler, is mounting due to its exposure to the property sector and cash flow problems, an analyst told Reuters Insider.

Dubai Holding is seen as the next subject of the emirate's debt restructuring programme which started with Dubai World in November, Saud Masud, head of research for the Middle East and North Africa at bank UBS, said in an interview.

'We believe Dubai Holding has roughly $15 billion in loans and bonds but this does not include any off balance liabilities arising from investor or end-user default on properties that have dramatically declined in 18 months,' Masud said.

'There is a clear cash flow risk in Dubai and I wouldn't be surprised if the same holds true for Dubai Holding,' he said.

Dubai Holding, owned by the emirate's ruler Sheikh Mohammed bin Rashid Al Maktoum, holds a substantial portfolio of brands in the property and hospitality sectors, organised under three main groupings: Dubai Holding Commercial Operations Group (DHCOG), Dubai International Capital and Dubai Group.

A debt restructuring of Dubai Holding would further dent Dubai's reputation following the shock of Dubai World's difficulties, Masud said.

The Investment Corporation of Dubai (ICD), is the third, large holding company that contains assets controlled by the ruling family.

'I think the prestige risk is considerably higher with Dubai Holding as compared to ICD or Dubai World given its direct linkage to the head of the Dubai's ruling family,' he said.

Dubai Holding may struggle to service debt and keep enough working capital at the same time, making a debt restructuring crucial, he said.

Concerns about the overall debt burden of Dubai's state-linked companies flared last November, after the emirate announced a standstill on repaying $26 billion in debt as it restructured conglomerate Dubai World. It unveiled a $9.5 billion rescue plan for the firm in March.

The UAE's central bank governor Sultan bin Nasser al-Suweidi said on Monday the worst was behind the emirate and that he could not foresee the outcome of a potential Dubai Holding restructuring.

Dubai Holding's unit DHCOG delayed its 2009 results in April while trading in its Islamic bond, listed on Nasdaq Dubai, was halted on May 2. The delay was extended on May 16, with DHCOG citing complexities in consolidating results of its units.

The Financial Times reported this month that three companies within Dubai Holding, including DHCOG, had engaged advisers ahead of a potential plan to restructure billions in debt.-Reuters