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Dubai CDS falls on Borse Dubai loan deal

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Thursday, 19 February 2009
CDS DROP: Now, it would cost $950,000 a year to cover $10m of 5-year debt. (Getty Images)
CDS DROP: Now, it would cost $950,000 a year to cover $10m of 5-year debt. (Getty Images)

The cost of insuring Dubai's debt in the credit default swaps market fell 50 basis points to 950 basis points on Thursday, a day after state-run Borse Dubai successfully raised $2.5 billion from a syndicated loan.

That means it would cost $950,000 a year to cover $10 million of five-year debt - almost twice the levels seen a week ago but still pricing in a lower risk of default. The loan deal had been seen as an acid test of the ability of Dubai's state companies to refinance their own debt.

"The Borse Dubai news has definitely moved the CDS," said Commerzbank debt strategist Luis Costa. "It should be good news for sentiment across emerging markets."(Reuters)

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