After enduring weeks of its own bond-market pain, this city-state came to the rescue of its cash-strapped neighbor Dubai on Monday, a move that could be as good for Abu Dhabi in global markets as it is for Dubai.
By underwriting Dubai World, the parent of Dubai's port operator and the conglomerate at the heart of Dubai's debt woes, Abu Dhabi triggered an immediate bout of investor optimism that promises to ease its own borrowing costs. The move also appeared aimed at protecting the United Arab Emirate's reputation as a global transportation hub, according to one person familiar with the situation.
On Monday, Dubai said the government of Abu Dhabi would provide $10 billion to meet the debt obligations of Dubai World, which previously said it would restructure $26 billion in debt. Monday's funding brings Abu Dhabi's direct and indirect support for Dubai to $25 billion so far. That sent stock markets in both countries soaring.
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