Debt and equity investors initially reacted with joy when the United Arab Emirates central bank, after months of speculation, said it would underwrite $10bn of a $20bn bond sale by Dubai.
But more than a week on from the announcement, investors who had hoped for a silver bullet have been disappointed.
The Dubai stock market jumped 7.9 per cent on February 23, the first day of trading after the bail-out was announced, but has since lost its gains. The cost of insuring against default of Dubai’s debt has also started to tick up again, although it is still a lot cheaper than before the loan was announced.
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