With Dubai World set to receive a $9.5 billion cash injection, the market is considering lessons from the near-default. The state-owned company’s troubles have exposed short comings in local law – especially Dubai’s insolvency regime – that need to be addressed.
On Thursday, Dubai’s government announced that it would help Dubai World pay bonds due to mature in 2010 and 2011. This ended rumours that circulated earlier in the year (and were reported in IFLR) that bondholders would have to take a haircut of between 50% and 70%.
“Once you start defaulting on capital...