How Safe Is Your Sovereign Debt?

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: el7bara /Foter

Dubai and Abu Dhabi find themselves at the opposite end of the sovereign debt spectrum.

While Dubai continues to remain in the list of the ten riskiest ‘sovereigns’ in CMA Datavision’s quarterly update, Abu Dhabi is now seen as among the ten safest sovereign debt. READ MORE HERE

Why Buying Dubai Debt Is A Good Idea: Analysts(0)

Dubai has come a long way in a short period of time. From being shunned by investors after it infamously requested a debt standstill from creditors in November 2009, the emirate has made a number of painful cuts and significant restructuring of key companies.

The emirate has matured considerably, swallowed its pride, shunned projects that did not add value and brought down debt during the period. READ MORE HERE

Dubai Debt Burden Is ‘Unsustainable’: IMF(0)

Dubai’s debt problems refuse to go away, as the IMF warns that the emirate’s debt will rise to 53% of GDP by 2016 if it does not act. Plus, sanctions on Iran could shave as much as 0.7% of UAE’s GDP.

Dubai’s debt may become unsustainable in the absence of policy change, according to the International Monetary Fund (IMF) in its periodic report on the UAE. READ MORE HERE

How the UAE Economy Imploded - Explained In 6 IMF Charts(0)

The global financial crisis brought an end to a decade of high growth.

The U.A.E. has had remarkable achievements over the last decade with its open and outward orientation, which led to a diversified and steadily growing economy. The decline in oil prices, the post-Lehman shut down of international capital markets, and the price correction in the property market in Dubai have put significant strains on the economy.

The UAE authorities supported the banking sector through liquidity injection, recapitalization, and deposit guarantees, and the Emirate of Abu Dhabi provided financial support to the Emirate of Dubai. Nevertheless, the combination of substantial short-term borrowing of the highly-leveraged GREs in Dubai, the price correction in the real estate market, and maturity mismatches forced Dubai World (DW), a major Dubai GRE, to seek a debt standstill. Real GDP is estimated to have contracted by 3¼ percent in 2009.

Here is how the drama unfolded in those dark days of Dubai. Click on the charts below to continue:

And then read How The UAE Economy Is Recovering

Black Swan Fatigue?(1)

The world is going through one disaster after another. But are these all Black Swan events or known unknowns? But are these events occuring more frequently, or are they just being better reported? What’s a risk manager to do? Read More
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