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Dubai World Deal Leading to Bond Sale Revival

UAE : 28 March 2010

Once the debt restructuring plans for Dubai World were announced this week credit default swaps linked to Dubai began to plunge almost immediately.  Subsequently bonds sold by Nakheel increased by almost 45% as soon as its debt had been guaranteed by its parent company Dubai World.

Many of those who have borrowed are saying they intend to sell debt again once the final debt restructuring has been finalized and announced to the public domain. Companies who reiterated this statement include Dubai Electricity and Water Authority and Emirates NBD.

The financial implications of the Dubai World deal has restored overseas confidence in the whole local economy with companies such as Banque Saudi Fransi and the National Bank of Abu Dhabi now feeling confident about the future credit stability of all the economies in the Gulf region.

Dubai credit default swaps have already fell by almost 54 basic points to just under 369 basic points on Thursday on the London Stock Market the CMA Data Vision prices has claimed. Nakheel’s Islamic bond or sukuk as it is known which is valued at $750 million increased by 29.5 cents to 94.735 cents on the dollar last Thursday.

Many though are still sitting on the sidelines and waiting to see how the markets develop over the next couple of weeks but most are now confident that the UAE banking sector has headed for calmer waters.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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