Dubai’s $10bn loan lifeline from the federal United Arab Emirates government has eased fears of imminent defaults in the debt-laden emirate but concerns remain about the health of its economy, bankers and analysts said on Friday.
The UAE’s central bank said last Sunday it would underwrite $10bn of a $20bn bond issuance by Dubai, initially causing jubilation among bond and equity investors in the statelet.
But towards the end of the week, the cost of insuring against the default of Dubai state-backed companies again started to rise, and the Dubai stock market ended the week down 2 per cent, despite surging 7.9 per cent on Monday on news of the bail-out.
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