Restructuring proposal draws cautious welcome

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As the credit crunch took its toll on Dubai in late 2008, Nakheel's chief executive was asked if he worried about the property developer repaying its Islamic bond due a year later.

"Why would I? The world will be a very different place then," Chris O'Donnell replied. A year later, Dubai was different - but not in the way he expected.

Dubai World, the state-owned conglomerate that includes Nakheel, almost allowed the sukuk bond to default and shocked markets by asking to restructure $26bn in debts. Oil-rich Abu Dhabi had to step in with a $10bn loan to help repay the bond, on top of an earlier $10bn loan from the United Arab Emirates central bank in February 2009.