CDS spreads halve on improved confidence

Though the credit default swap (CDS) spreads of Dubai has fallen by about 50 per cent from the levels of 1000 basis points (bps) to about 500 basis points since February, indicating a substantial fall in the risk perception on the emirate, this has failed to reflect on Dubai bond yield so far.

While Abu Dhabi bond is currently trading at about five per cent yield, the Dubai bond, launched in 2008 and maturing in 2013, is trading at yields as high as 8.5 per cent.

During the same period, the Abu Dhabi CDS has dropped from 450 bps to just about 230 bps.