The recovering price of Nakheel’s bonds is one of the clearest indications yet that Dubai is getting the upper hand on the financial crisis.
Nakheel’s debt long ago became a litmus test for Dubai’s ability to rescue its own companies. With property markets in decline, few believe Nakheel can get banks or investors to lend it the US$3.52 billion (Dh12.93bn) it needs to redeem bonds maturing four months from now. The money will have to come from Nakheel’s owner, the Government of Dubai.
Dubai has never promised it, but investors have long assumed that if Nakheel or any of Dubai Inc’s companies had trouble paying the $70bn-odd they owe, the Government would step in. And if Dubai cannot manage it, then the UAE with its vast oil revenues was standing by.
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