Sovereign cuts Dubai World adrift

As financial markets continue to roil following Dubai World’s request to restructure $3.5 billion of Islamic debt falling due next month, some clues behind the surprise decision can be found in the circular document for a bond offering that the government made in late October. On October 21, the government issued a preliminary prospectus to raise $4 billion through a Euro Medium-Term Note programme. At the same time, Dubai’s department of finance issued another prospectus to raise up to $2.5 billion through sukuk bonds. Within both documents the government itemized, for the first time, what it considered to be the obligations of Dubai Inc – the sovereign itself and related entities. Dubai World and its entities, including real estate developer Nakheel, were not on the list. It’s a crucial...