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Emirates central bank steps in to save Dubai

THE United Arab Emirates' central bank stepped in to support Dubai after concern that the emirate will struggle to repay its debt as global financial turmoil pushed up credit costs and burst a real-estate bubble.

The central bank bought half of an unsecured, US$20 billion, 5-year notes issue at an annual interest rate of 4 percent, Dubai's Department of Finance said in an e-mailed statement yesterday, Bloomberg News reported.

Home to the world's tallest building and largest man-made islands, Dubai borrowed US$80 billion to turn itself into a regional financial and tourism hub. Moody's Investors Service said in October that Dubai may need help from Abu Dhabi to pay for its debt. The emirate may have to refinance US$15 billion this year in maturing loans and bonds.

"This is the biggest news of the year for the regional bond market," said Abdul Kadir Hussain, chief executive of Mashreq Capital, a unit of the United Arab Emirates' fifth-biggest lender by assets. "This is a clean solution to Dubai's short-term refinancing needs. We're already seeing Dubai-based bonds rallying."

Dubai real-estate prices have fallen 25 percent from September's peak.


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