Dubai is in a 'nasty mess of its own making' – but so are we

Dubai has already given the world some of its biggest buildings (see below) and biggest indoor ski slope, says Alistair Osborne in The Daily Telegraph. Now it has produced "the biggest debt-market cock-up".




Last Wednesday, the Emirate's government suddenly asked creditors of Dubai World, a large state-sponsored conglomerate with $60bn of obligations, to agree to a standstill on debt repayments until next June at the earliest. This included the $3.5bn Islamic bond issued by the group's Nakheel property subsidiary – the company behind the palm island land reclamation project – and due to be repaid in mid-December. Then it shut up shop for a four-day Islamic holiday.
Dubai shocks the markets

The announcement left investors feeling "wronged and wrong-footed", says The Economist. Only three weeks before the government had insisted it would meet all current and future obligations on its $80bn or so of debt (although some analysts reckon about the same sum is hidden off balance sheet).

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