Dubai's credit risk dropped to the lowest in almost two months as bond repayments and profitability at companies boost confidence in the emirate's economic rebound.
The cost to insure Dubai's debt against default dropped to 317 basis points Aug. 1, the lowest since June 7, according to credit default swap prices from data provider CMA. They were at 325 basis points yesterday, still down more than 50 percent from the 655 reached in November 2009 after state-owned Dubai World announced plans to restructure about $25 billion in debt.
The emirate, which received $20 billion in aid from Abu Dhabi in 2009, has benefited from stable government in contrast to the political upheaval sweeping the Middle East. Economic growth in Dubai may accelerate to about 2.8 percent, the International Monetary Fund forecasts in a report published in May. That comes after growth of 2.4 percent in 2010 and a contraction in 2009, according to government statistics.
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