Cost of insuring Dubai debt spikes to two-month high

Cost of insuring Dubai debt spikes to two-month high

Five-year credit default swaps (CDS) for Dubai spiked 30 basis points from the previous close to 440 basis points, according to CDS monitor Markit.

November 12, 2010 2:14 by Reuters

The cost of insuring Dubai sovereign debt against default or restructuring rose to a two-month high after news that a company in one of the Gulf Arab emirate’s conglomerates had missed two payments on separate loans in recent weeks.

Five-year credit default swaps (CDS) for Dubai spiked 30 basis points from the previous close to 440 basis points, according to CDS monitor Markit.

Sources told Reuters that financial services firm Dubai Group had missed two payments on separate loans in recent weeks, including one arranged by Citibank .

The emirate’s flagship conglomerate Dubai World reached a $25 billion restructuring deal with creditors in September after shocking global markets last November by calling for a standstill on its debt obligations.

(Reporting by Michel Rose and Sebastian Tong)