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Dubai stock index lifted from $10 billion Dubai bailout
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Dubai's stock market rose sharply as Abu Dhabi announced a 10-billion dollar bail out for debt-laden Dubai World. The unexpected news brought some welcome relief to the market.
Dubai's benchmark stock index led a surge Monday on regional markets, jumping more than 10 percent. This was the market's biggest one-day gain in fourteen months.
Fadi Ajaj, stockbroker, said, "Today the stocks in the DFM and in the ADX have surged today on the news about the bailout from Abu Dhabi, the 10 billion dollar bailout from Abu Dhabi, of course this was a very pleasant surprise for every investor in the UAE and outside the UAE."
Dubai says 4.1 billion dollars of that bailout is allocated to property developer Nakheel to repay its Islamic bond which matured on Monday.
The remaining funds will be used to help Dubai World, which has asked creditors to agree to restructure 26 billion dollars of its debt, until the end of April next year.
Fadi Ajaj said, "I think it's a very positive step towards solving the Dubai debts, it's a great step here to resolve the issue with the Dubai World bonds."
Dubai also announced a new bankruptcy law. The law could be used in case Dubai World and creditors fail to reach an agreement on debt maturing in the future.
The Dubai government hopes the new law which took effect on Monday could allow Dubai World to file for bankruptcy, if its restructuring is not successful.
