Dubai’s default risk dropped five times more than the Middle East average this month as a series of debt repayment agreements showed government-related companies are benefiting from an economic recovery.
The cost of insuring the emirate’s debt for five years retreated 43 basis points in June to 352 on June 19, according to data provider CMA. That compares with an eight basis-point decline in average credit default swaps in the Middle East to 322, while contracts for the Group of 10 nations fell 13 basis points in the period to 152, data compiled by Bloomberg show.
Jebel Ali Free Zone FZE, a business park operator in Dubai under state-run Dubai World, and DIFC Investments LLC are among companies that have refinanced debt. Investors regard these deals as evidence that Dubai, which avoided a default in 2009, is living up to pledges that its companies would repay debt without state help as economic growth accelerates, pushing bond yields to record lows.
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