Credit default swap, or CDS, spreads in Abu Dhabi have dramatically narrowed since May 2012, from 142 to 99, signifying an increasing investor confidence on the back on diminishing sovereign risk.
Analysts said the plunge in CDS spread meant, apart from lower sovereign risk, declining bank risk entailing a valuation rerating for Abu Dhabi banks and government/quasi-sovereign debt.
Matein Khalid, chief investment officer and strategist at Fortes Holdings, said there was no doubt that Abu Dhabi has emerged as a safe haven for regional capital flows since it offers investors a compelling set of attributes.
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