To see how far Dubai has come, take a look at its credit default swaps, reports Bloomberg.
The extra cost investors pay to insure the sheikhdom’s bonds versus those of its oil-rich neighbor, Abu Dhabi, has fallen below 60 basis points this month for the first time on record. That’s down from 555 basis points back in 2009, when Dubai’s government-related companies were in talks to restructure billions of dollars in debt and Abu Dhabi came to the emirate’s rescue with a bailout.
Dubai is a rare example of a Gulf economy that doesn’t rely almost entirely on oil revenue to fund expansion. Wholesale and retail trade were the biggest contributors to gross domestic product last year, followed by transportation and storage. That helped cushion the emirate’s finances from declines in the price of crude.
The same can’t be said for Abu Dhabi, which holds about 6 percent of the world’s oil supply and where crude contributed about 25 percent to GDP last year. Its credit default swaps have fallen four basis points this year, compared with a 30 basis-point drop in Dubai’s contracts.