For a few days in February the world lost faith in Dubai. Its credit score rivalled that of Iceland's and speculation focused on what the emirate would look like post-default.
On February 17, the credit default swaps CDS for Dubai's five-year sovereign debt surpassed the 1,000 basis point threshold. Before the economic crisis, Dubai's CDS spread was in the 100bp to 200bp range.
When that happened, bankers and people in the financial system panicked, said a local banker. They realised if a credit score of more than 1,000bp is going to be the prevalent view of the world on the credit worthiness of Dubai, how would you ever be able to finance anything At those...
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