Fears over Dubai’s ability to service its debts led Abu Dhabi finally to stage a marked response at the weekend. In a ‘lender of last resort’-type move the emirate bought $10bn of Dubai bonds to help its neighbour raise funds.
As Bloomberg reports, the market responded very positively to the action:
Feb. 23 (Bloomberg) — Dubai shares jumped as the United Arab Emirates’ central bank bought $10 billion worth of bonds issued by Dubai after the emirate struggled to raise funds amid a global credit squeeze that ended its real-estate boom. Emaar Properties PJSC, the U.A.E’s biggest real-estate developer, climbed the most in more than a month. Dubai Islamic Bank PJSC rose for the first time this week and Dubai Financial Market PJSC also advanced. The U.A.E. central bank bought half of an unsecured, $20 billion, 5-year notes issue at an annual interest rate of 4 percent.
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