Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.
Dubai, which borrowed $80 billion in a four-year construction boom to transform its economy into a tourism and financial hub, suffered the world’s steepest property slump in the recession. Home prices fell 50 percent from their 2008 peak, according to Frankfurt-based Deutsche Bank AG.
Dubai World, the state-owned holding company that’s in talks to renegotiate $26 billion of debt, may sell assets in the United Arab Emirates and abroad to repay its borrowings, a government official said.
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