Sunday, November 29, 2009
It’s contained… like sub-prime
The Abu Dhabi authorities appear to have had no inkling Dubai was going to spring this surprise, which is already having devastating results. The cost of protecting Dubaiâ€™s paper against default has quadrupled â€“ putting the emirate in the same league as Iceland â€“ and the credit ratings of its leading companies have been downgraded. Yet the fallout in raising the cost of insuring sovereign debt has spread not only across the Gulf but throughout emerging markets. This is a mess.