For other Gulf nations, the most important factor with Dubai’s debt restructuring is how it will affect their ability to borrow from international financial markets.
Sovereign risk assessment is back with a vengeance and it is no longer enough to borrow as though the funding was endless and on easy terms.
The immediate reaction of the rest of the world to the Dubai restructuring was predictable – higher rates for credit default swaps (CDS), the abandonment of some global bond launches such as Gulf International Bank’s dollar bond, and a general reassessment of Gulf credit risk.
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