The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Sovereign bonds: Dubai – The rewards of being in the UAE

Is investor generosity towards Dubai justified?

Given the regional unrest, Middle East sovereign bonds have shown a surprising rally. As Euromoney went to press, sovereign spreads were tighter on average than in mid-February: evidence that the Arab Spring benefits some, especially via the oil price.

Even more surprising is that oil-poor but politically stable Dubai is at the forefront, with its sovereign spreads tightening by some 150 basis points over the past two months. State-linked corporate yields have declined even more rapidly, in some cases by more than 500bp.

The Dubai government is still on track to take direct ownership of troubled flagship developer Nakheel, now a subsidiary of state-owned conglomerate Dubai World. The buyout is a key condition of Dubai World’s $22 billion restructuring, signed in March. This restructuring will be a key advance for Dubai’s indebted state-linked firms.

Markets even rallied on news last month that the government had been forced to bail out one of the smaller lenders, Dubai Bank. Bondholders saw another sign that the state would protect Dubai Inc directly. The question now is whether markets are being too generous. Restructurings of around $10 billion each are still under negotiation for Dubai International Capital and Dubai Group: the investment arms of Dubai Holding, ruler Sheikh Mohammed’s personal conglomerate.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree