UAE Backs Dubai Banks

Regional markets up on news of funds to pay Nakheel's bond

(NEWSER) - 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. More»

Weak UAE statement stokes fears of tension between emirates

(NEWSER) - The United Arab Emirates’ vaguely-worded statement of support yesterday for Dubai—which didn’t actually mention the city-state by name—isn’t reassuring investors, who fear rocky relations between emirates, the cash-strapped Dubai and oil-rich Abu Dhabi. The latter could easily wipe out Dubai World’s delinquent $59 billion debt, but the predominant speculation is that it’ll want major concessions in any bailout, the New York Times reports. More»

Exxon down 4.7% after XTO Energy acquisition

(NEWSER) - Stocks posted solid gains off the news that Abu Dhabi had given Dubai $10 billion to head off its credit woes, soothing worries of a sovereign default, the Wall Street Journal reports.

• The Dow rose 29.55 points to close at 10,501.05.
• The Nasdaq gained 21.79, closing at 2,212.10.
• The S&P 500 added 7.70 to settle at 1,114.11.

Unclear how default will affect Islamic lenders, who earn no interest

(NEWSER) - Dubai World’s unraveling could prove a critical test for the rapidly growing Islamic finance sector, and Dubai’s murky judicial system. A significant chunk of Dubai’s debt is in the form of Sharia-compliant bonds, the New York Times explains. These increasingly popular instruments forbid lenders from collecting interest, instead putting them in a partner-like relationship with the borrower. There have been few major defaults on them, leaving courts little precedent in arbitrating them. More»

Says it's not responsible for state-owned company's debt

(NEWSER) - Dubai’s government threw investors a curve ball today, saying that even though struggling Dubai World is state owned, the government won’t guarantee its debts or bail it out. Lenders “have deemed Dubai World as part of the government, and this is not true,” Dubai’s finance director said on TV. “The government is the owner of the company, but since its foundation, it was established that the company is not guaranteed by the government.” More»