Stock markets in the region rise after news fellow UAE member will help pay off Dubai's debts
Dubai’s government has received a $10bn injection from neighbouring Abu Dhabi to help it pay off its debts.
The beleaguered emirate will use $4.1bn of the cash to bail out property company Dubai World, which caused global wobbles two weeks ago when it asked creditors for an extension on repayments. It has a $4.1bn bond due to be repaid today.
Stock markets in the region rose this morning off the back of the news, which will calm investor nerves over cash-strapped Dubai.
Dubai’s main share index rose 10% and Abu Dhabi’s by 7%.
In a statement, the chairman of Dubai's Supreme Fiscal Committee Sheikh Ahmed bin Saaed al-Maktoum said: "The government of Abu Dhabi has agreed to fund $10bn to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World."
The Middle East head of a major UK construction consultant said: "Abu Dhabi was always going to do this. It's a cultural no no to default on a debt."
He said the development suggseted that British firms owed money by Dubai developers would eventually get paid.
John Sfakianakis, the chief economist of Banque Saudi Fransi-Credit Agricole in Riyadh told Reuters: "That should bring in a lot of confidence, basically Abu Dhabi is footing the bill.
"It will take time for the implications to unfold. I highly doubt this kind of money has no strings attached."