Dubai might opt to keep bank lenders onside and force bondholders to take a haircut as it tries to avoid wider refinancing for the emirate and the region as a whole.
Lenders are in for the long haul and have too much at stake to do anything other than roll over and restructure existing loans as they mature at rates that reflect Dubai's increased risk, bankers said.
Dubai World's $26 billion (Dh96 billion) standstill cut its access to international capital markets, leaving the company and the emirate with few financing alternatives, which puts the banks in a stronger negotiating position than bondholders.
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