The Limits of Dubai
Global investors are in a giant huff over Dubai’s decision to allow its flagship private company Dubai World to seek a six-month standstill (implying at least partial default) on payments on some $26 billion in debt. But what really upset investors was the realization that, in an over-leveraged world, some day untenable debt guarantees will have to be withdrawn.
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Cambridge – Global investors are in a giant huff over Dubai’s decision to allow its flagship private company Dubai World to seek a six-month standstill (implying at least partial default) on payments on some $26 billion in debt. What exactly did investors expect when they purchased bonds in companies with names like “Limitless World,” one of Dubai World’s bankrupt real-estate subsidiaries? Talk about a bubble mentality.