Sunday, December 13, 2009

The Cavalry has arrived to scatter the vulture funds!! Or rather to pay them off in full!

Abu Dhabi has agreed to support Dubai and Dubai world with $10 billion and will pay off the Nakheel sukuk in full as well as the trade creditors. Dubai will implement a new restructuring law in the event that it is not able to recover from this and winds up putting other entities into liquidation. World markets are rebounding and Dubai credit is loosening. It seems that the salesmen who pitched the Dubai GRE debts as safe because they would be made whole by Abu Dhabi were right after all though after a harrowing two weeks.

The whole thing does kind of make you wonder what that whole two week head fake thing was all about but unless your last name is either Maktoum or Nahyan you'll never know. The announcement says that Dubai World is considered strategic and the other Dubai GREs will be dealt with on a case by case basis. The plot thickens as it thins.

I'll have to think more about the long term implications of this but if it does result in a more robust commercial legal system in the Emirates it will be a long term positive. In any case, high fives all around at the Vulture Funds and Dubai can take a deep breath.

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