Dubai World Crisis Brings Down the World
Late last week, the global stock markets plummeted by more than 3% within a single day due to the fear of a debt default of $60 billion from Dubai World, the government investment company behind some of the emirate’s most ambitious projects.
Dubai World was seeking to delay repayment on a tranche of its debt. The company is under heavy debts tallying up to tens of billions that were used to fund the real-estate projects from the Middle East to Las Vegas.
The company has $60 billion of liabilities from its various companies including Nakheel, the property firm behind the Palm Jumeirah, the world’s biggest artificial island, and the Nakheel Tower, the world’s tallest building at 1km high.
According to investors, an Islamic bond, sukuk, issued by one of Dubai world’s subsidiaries, fell to 57 cents on Friday from 110 cents on Wednesday.
There were a lot of negative reports from the media stating that the Dubai debt crisis may lead to a financial contagion, similar to the 1997 Thailand financial crisis.
