Thursday, February 19, 2009

Should we be worried about Dubai?

Won't Abu Dhabi come to the rescue?

Check out RGE's analysis. Of course - as the author mentions - yesterday Abu Dhabi loaned Dubai Bourse $1B "to avoid defaulting on a $3.4 billion loan." [But see UPDATE below.] Oddly (or not) the version of the Reuters story run in Dubai's Gulf News does not mention Abu Dhabi's role. I did not find the story in the Abu Dhabi-funded The National.

UPDATE: Financial Times reports,
At the eleventh-hour, local banks stepped in to make up the $1bn shortfall.

Bankers and officials dismissed reports that the UAE federal government had deposited funds in local banks to underwrite the shortfall.
The closure of the $2.5bn loan, scheduled to be announced on Thursday, is an indication that Dubai has prized open clogged credit markets and should go some way to assuaging investor concerns about Dubai’s risk of default.



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