Abu Dhabi surprised investors today by pledging $10 billion to Dubai, as a stabilization of a rocky situation in which Dubai World, the emirate’s premier investment company, teeters on default of a $4.1 billion bond issued by Nakheel, a property developer owned by Dubai World. The bond matures today.
The NYTimes writes of historical trouble between the agressive expansion ambitions of Dubai and the more fiscally conservative Abu Dhabi. However, as investors made it clear that they’re not interested in negotiating but instead taking collateral in the form of the United Arab Emirates’ most valuable properties, Abu Dhabi has offered assistance.
Abu Dhabi was also taken aback by the harsh reaction by global investors after Dubai World asked for the delay on the debt repayments. Credit rating agencies downgraded most institutions in Dubai and Abu Dhabi, making it extremely difficult for these companies to raise funds abroad. via NYTimes