Dubai CDS drops 22% in three weeks

Dubai CDS drops 22% in three weeks. (EB FILE)

As proof of rising investor confidence in Dubai's ability to handle the fallout of the global economic crisis and the Dubai World debt restructuring, Dubai's five-year credit default swaps (CDS) has fallen substantially in the past weeks.

The CDS – measuring the cost of insuring sovereign debt against default – has dropped by more than 22 per cent to a shade above 500 basis points in less than three weeks. The rate was hovering at 507.12 basis points as at 3.30am UAE time on Saturday, according to CMA DataVision.

This is almost 145 basis points below the peak of 652 basis points reached on February 15.

An increasing number of analysts are calling for a curb in CDS trading as they believe that a bet on sovereign defaults leads to greater market volatility and unwarranted weakening of underlying currencies.

 

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

 

Comments

Comments