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Dubai's $10B bailout by Abu Dhabi calms fears

Posted by on Dec. 14, 2009 at 3:37 PM
  • 2 Replies

DUBAI, United Arab Emirates (AP) -- Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring while sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown's star companies.

The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts.

Investors cheered Monday's news. Dubai's main index shot up 10.4 percent at the close and markets elsewhere rose modestly.

Prior to the crisis, most investors had assumed the Dubai government itself, possibly with Abu Dhabi's help, would guarantee debts amassed by its chief growth engine.

Dubai authorities are scrambling to reshape the business hub's battered image, vowing that the city-state is committed to "transparency, good governance and market principles." Officials outlined a new legal framework that promised to increase openness and protect creditors in future dealings with the conglomerate, offering lenders succor in a country where formal bankruptcy proceedings are largely untested.

"We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheik Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee, said in a statement.

Some $4.1 billion of the funds released Monday will go toward meeting a deadline to repay Islamic bonds issued by Dubai World's Nakheel property arm. The conglomerate, whose sprawling holdings range from the oceanliner Queen Elizabeth 2 to luxury retailer Barney's New York, will use the rest.

http://finance.yahoo.com/news/Dubai-gets-10B-from-Abu-Dhabi-apf-3358167649.html?x=0

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by on Dec. 14, 2009 at 3:37 PM
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eaglemama2
by Silver Member on Dec. 14, 2009 at 4:20 PM

Oh wow!  I remember many years ago how Dubai was the place to be, to work and live.  Having had many friends who worked for Emirates, some major banks, and hotels, I have heard many great things.     I think it's a good thing that Abu Dhabi injected some money into the economy.  I would hate so see it crumple.


tericared
by on Dec. 14, 2009 at 4:56 PM

I hope their "bailout" does a better job than ours did.... 

OH crap the, "why dont you leave if you dont like it", crowd will be all over that statement.......I was being SARCASTIC......

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