Dubai's government-related entities (GREs) can pay down or refinance nearly $14 billon in debt maturing next year with relative ease, a report by investment bank J P Morgan said on Thursday.

The emirate's capital market risk is limited primarily to Jebel Ali Free Zone (Jafza), a unit of state-owned conglomerate Dubai World that is looking to refinance its 7.5 billion UAE dirhams ($2.04 billion) Islamic bond, and the topping up needs of the Dubai Financial Support Fund (DFSF), which are about $2.5 billion to $3.5 billion.

"The $14 billion wall of debt maturities at Dubai GREs next year is not nearly as daunting as the headline number suggests," analyst Zafar Nazim said in a report dated October 12.

However, the report expressed concerns about the yet-to-be-concluded state-linked restructurings as they could lead to repercussions such as negative headlines, litigation and the burden of financial support on the government.     

Dubai Group, part of a conglomerate owned by the emirate's ruler, may take longer than expected to reach an agreement with its lenders on a $10 billion debt deal, a senior banker involved in the talks said earlier this week.

The report also said that state-owned entities Dubai Holding Commercial Operations, DIFC Investments and Jafza are focused on next year's bond maturities without any support from the DFSF.

"These entities expect to meet bond maturities via a combination of operating cash generation, asset sales and refinancing. Accessing DFSF appears to be more of a Plan B," said the report.

Only $3.3 billion of debt maturities - relating to Jafza and DIFC - could be considered challenging. The remaining roughly $10 billion of debt for next year is at entities that have healthy balance sheets and cash generation, the analyst said.

Meanwhile, the government's property arm Nakheel, which recently completed its $16 billion restructuring, is expected to see an injection of $1.5 billion to $2 billion over the June 2011 to December 2012 period.

Dubai has been in the spotlight for its debt woes since late 2009, as it struggled to rebuild investor confidence since state-owned Dubai World announced a $26 billion restructuring. - Reuters