Dubai or Bahrain, which is safer for bond investors? A year ago the answer was easy – Bahrain. Dubai’s reputation had been rattled by the manifest difficulties of its overborrowed companies.
But in the wake of the Arab Spring, things look different. The rulers of Dubai have avoided the turmoil that has struck the region. Bahrain, of course, has not, with anti-government protests early last year that provoked a violent reaction from the authorities. It’s clear where investors prefer to put their money.
As the chart shows, Dubai’s five-year credit default swaps are trading this week at around 415 basis points, according to Markit. This is about the same level as they were in January 2011, when protestors filled the streets of Cairo and the Arab Spring turned into a regional phenomenon as it spread from Tunisia to Egypt.
No comments:
Post a Comment