The leaders of Dubai have been accustomed to an easy ride when it comes to raising money, with bank and bond investors around the world willing to pump tens of billions of dollars into increasingly grandiose projects on the premise that, if anything went bad, the emirate and its oil-rich neighbor, Abu Dhabi, would stand behind the debt.
That era of easy money -- and a presumed government guarantee -- has been grinding to a halt for months now and officially ends on Monday, when the government of Dubai has said that one of its main government-owned companies will skip a scheduled $4 billion bond payment.
Although a negotiated agreement is still possible, analysts say that the uncertainty raised by Dubai's recent actions -- the government said last month that it was suspending payments for six months on a total of $26 billion owed by government-owned companies -- could put projects at risk throughout the region, bring closer scrutiny from banks and investors, and raise borrowing costs.
No comments:
Post a Comment