Dubai World debt agreement lifts UAE stock markets slightly

08:39, May 21, 2010      

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Dubai World announced Thursday that it has reached an agreement in principle with main creditors to restructure 23.5 billion U.S. dollars of its debt, a move which was hailed by investors at stock markets in the United Arab Emirates (UAE).

The announcement came as a conclusion to a statement made last November, when the indebted state-owned conglomerate said it would not be able to meet its debt commitments and asked for an immediate restructuring.

As a result, the UAE stock exchanges DFM in Dubai and ADX in Abu Dhabi ended higher respectively at 1,691.71 points, up 0.35 percent, and 2,780.63 points, up 0.19 percent. The small increase in Abu Dhabi occurred as foreign investors continued to sell their shares in the UAE, according to investment bank EFG Hermes.

Five-year sovereign credit default swap (CDS) spreads tightened to 465 basis points Thursday from 469 basis points on the previous day, hinting an improvement of Dubai's credibility. With CDS, investors can insure themselves against bond defaults.

At Nasdaq Dubai however, shares of Dubai Ports World, which is part of the Dubai World holding, plummeted 4.35 percent, closing at 0.44 dollar.

Other Gulf markets ended this week with slight losses. The Bahrain Stock Exchange posted the largest loss, down 0.40 percent at 1,498.66 points. However, since the beginning of this year, the Bahrain market has been the best performing Gulf Arab exchange, climbing 2.77 percent higher.

The Qatari Exchange closed insignificantly lower at 7,082.51 points. The Kuwait Stock Exchange fell by 0.17 percent and ended at 7,063 points.



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