Abu Dhabi’s decision to offer Dubai financial succour has bought time for the debt-laden emirate to restructure its troubled Dubai World conglomerate, but the former boom town still faces a severe test.
Dubai World holds most of the emirate’s credit pile, and despite the $10bn (€6.8bn, £6.1bn) support extended on Monday by Abu Dhabi, the United Arab Emirates capital, the conglomerate must still restructure its debts.
Abu Dhabi’s move temporarily staves off the spectre of default, but bankers remain concerned that other state-owned companies, known collectively as “Dubai Inc”, may have to restructure their own debts. Meanwhile, other looming maturities will continue to strain the emirate’s finances and economy.
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