As Gregg noted earlier today, the cash-strapped Dubai investment authority known as Dubai World has received a $10 billion indirect bailout from Abu Dhabi, a fellow emirate of Dubai's and the capital of the United Arab Emirates. The Abu Dhabi bailout will go to the general Dubai Financial Support Fund, which aids struggling emirate companies, but Dubai World will receive a large chunk.
The announcement sparked a rally in shares of bonds issued by Nakheel, a real estate arm of Dubai World, which owed a $3.52 billion Islamic bond today and had seemed unable to pay the full amount as of days ago. Such a dramatic turn has market watchers chattering: the Financial Times' Alphaville blog notes that anyone who bought shares of the once-depressed Nakheel 2009 bond (or its sister bond due in 2011) has "made several large sacks of money."
Back in November, Abu Dhabi participated in a bond sale to help Dubai raise debt, but only for $5 billion, of which only $1 billion was remitted immediately. So what changed since then, and who stood to gain?
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