Why Dubai World should not taint sovereign debt

Author: | Published: 10 Dec 2009

Investors holding sovereign bonds in Asia should not be alarmed by the struggles for recourse in Dubai World’s Nakheel bonds. Some observers believe the obligations of debt-issuing governments will be stronger than those tied to Dubai World.

“It’s unclear whether Dubai World is a corporate, a sovereign or a quasi-sovereign. It appears to be a little like Fannie Mae and Freddie Mac, where investors assumed the government was standing behind the obligations, but no formal guarantee was...