Investors should buy Dubai sovereign bonds as the emirate seeks to refinance its maturing debt with the help of oil-rich Abu Dhabi and as the sheikhdom focuses on an “orderly exit from the crisis,” Barclays Capital said.
“We consider Dubai credit as attractively priced at current levels,” London-based analysts including Alia Moubayed wrote in a report dated Nov. 4. “We recommend a long position in Dubai sovereign credit,” and see yesterday’s negative price actions as an opportunity to buy, the report said.
The cost of protecting Dubai bonds from default rose 1.8 percent to 314 basis points yesterday, the highest in about two months, five-year credit-default swap prices show. Moody’s Investors Service yesterday downgraded five Dubai-owned firms, citing tighter government criteria for supporting state- controlled entities. CDS prices increase as perceptions of credit quality deteriorates.
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