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Monday, December 14, 2009

Abu Dhabi gives Dubai $10 bn in surprise bailout

Abu Dhabi stepped in to help fellow United Arab Emirates member Dubai with a $10 billion injection, of which $4.1 billion was allocated to troubled state-owned conglomerate Dubai World to pay immediate obligations, Dubai said on Monday.

The move was the least expected of all options Dubai had on the table after requesting a standstill on $26 billion in Dubai World
debt on Nov. 25, alarming markets and shaking the image of the emirate as a regional business hub.

"The government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World," the chairman od the Dubai Supreme Fiscal Committee said in a statement.

"As a first action for the new fund, the government of Dubai has authorised $4.1 billion to be used to pay the sukuk obligations that are due today." The yen fell sharply against other
currencies on the news, while the dollar shot up to 88.90 yen and the euro also jumped to 130.43 yen.

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