Bailouts by rich Middle Eastern investors are nothing new in the current economic crisis, as America's banks can attest. But it's not often that the sheiks have had to rescue one of their own.
It happened the weekend of Feb. 21, when the United Arab Emirates' central bank snapped up half of a $20 billion bond issue by Dubai, the second largest of the seven states that constitute the UAE. The funding should allow the tiny Gulf state to meet some $13 billion of government and quasi-government debt that is due to be repaid this year.
The central bank, which is principally funded by Dubai's megawealthy neighbor Abu Dhabi, bought $10 billion of five-year notes at a deeply discounted annual interest rate of 4%. The remaining $10 billion is to be offered to other investors, though speculation is rife that the central bank will return to buy more of the issue if, as expected, the bonds fail to sell on the open market.
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