The cost of insuring against the default of debt issued by Emirates Bank International and Mashreqbank rose Tuesday following a decision by Moody’s Investors Service to place four Dubai-based banks on watch for a possible ratings downgrade.
Credit default swaps linked to Emirates Bank and Mashreqbank climbed 32 basis points to 455 and 482.5 respectively, according to CMA DataVision. Those figures measure the price investors must pay to protect against default; an increase indicates a lower perception of credit quality.
A spate of credit rating downgrades of financial firms in the region and a perceived rise in the risk of default on their debt has stoked renewed concern over the soundness of the Gulf’s financial system as governments plant the seeds of a recovery from the financial crisis.
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