Dubai to delay payment on $59 billion in debt

iceberg

This is making banks and lenders across the planet quite twitchy and could be the biggest sovereign debt default since Argentina in 2001. Abu Dhabi won’t backstop the debt and the price of credit default swaps for Dubai’s debt is is now greater than that for Iceland (which means big players think Dubai is in serious danger of defaulting.)

A Dubai default could cascade through banking institutions with the distinct possibility of unseen financial icebergs appearing out of the fog. Not only do financial institutions have to worry about their own exposure to Dubai debt, they also must ponder if their major trading and business partners have such exposure too.

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