Abu Dhabi Sinks $10B Into Dubai

Regional markets up on news of funds to pay Nakheel's bond
By Jane Yager,  Newser Staff
Posted Dec 14, 2009 6:01 AM CST
Abu Dhabi Sinks $10B Into Dubai
Cars pass by the Nakheel banners on the Sheik Zayed highway in Dubai, United Arab Emirates, Tuesday, Dec. 1, 2009. Nakheel is one of the main companies of Dubai World.   (AP Photo/Kamran Jebreili)

Dubai markets soared today on news that the troubled sheikdom has received $10 billion in financing from neighbor Abu Dhabi. The funds come just in time for $4.1 billion to repay an Islamic bond of Dubai World's real estate arm, Nakheel, which matures today. The remaining money will be used to pay creditors and contractors of debt-laden Dubai World through April 2010 and to prop up local banks.

A bounce from the news was seen not only in Dubai, where the main index opened up 10%, but also in Abu Dhabi, where shares closed up 7.9%, the Wall Street Journal reports. Nakheel's bond has been seen as a litmus test for Dubai's ability to repay its staggering $80 billion debt, and Abu Dhabi "saw the adverse market reaction to Nakheel debt restructuring news play out over several days and perhaps decided they had seen enough," a regional finance expert said.
(More Dubai debt crisis stories.)

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